The Future of the "Buyer Brain" 🧠 - How Shopify Brands Should Evolve to Serve the Modern Customer.

Mark Chouek: Jay, will you just do me a favor and do a very quick, I'm Jay. I am and this is me. And just introduce yourself.

Jay Myers: Hey, I'm Jay. I'm one of the co-founders at Bold Commerce. Personally been selling online since 1998, so that ages me a little bit. In 2012 started Bold and which is why we're here today.

Mark Chouek: Look, talking about retail, but we're talking not just about the challenges of retail on one side, but the ev evolution of customer and everything to do with the buying journey on the other. So it's kind of, I often think of retail as the front line of businesses.

Trying to match their business model with a totally evolving psychology and sense of expectation. I mean, it's really difficult, not least for retailers that had to transition online. That started as really large, big box legacy business models left over from other ages. Okay. So because you can't, it's really difficult to try to keep evolving a changing business model to keep up with a target that never stops moving

Jay Myers: Mm-hmm.

Mark Chouek: with technology, continuing to present more consumer opportunities while driving up expectations and demands for, you know, better experiences.

Most retailers seem only able to keep up with what we might call yesterday's customers. Why are brands not able to evolve faster and get ahead of consumers?

Jay Myers: I think the biggest challenge brands face right now when it comes to getting ahead is the majority of retail brands are stuck in what I would say is playing defense. They're behind the ball in a number of areas and you know, we focus a lot on membership and subscription space and so I actually think membership and subscription actually is, you know, just to set the stage a little bit.

That does not just apply to someone that offers subscribe and say product. I think we're evolving into a world where every brand is starting to think like a membership brand. So I, you know, I want to phrase some of these answers actually in that, because we saw this during COVID, we saw a massive rush towards, oh shoot, you know, I thought I had loyal customers.

COVID hit. Now they're just buying anywhere because. I don't offer local pickup or in-store pickup. And so they're going to the next, and what we thought was loyal actually wasn't loyal. And so everyone started to rush to implement systems of loyalty to actually to try to create customers that were members.

But we're stuck in this cycle of brands playing defense. And what I mean by that is they're trying to do things like worrying about trying to stop cancellations, but you know, stop customers from leaving, stop them from churning instead of playing offense, by designing memberships that people love and designing experiences that customers wanna be a part of.

You know, customers don't want just more membership and subscription products. They wanna belong to a brand, they wanna be a part of it. They want to feel that the brand knows them. And brands are stuck a bit behind right now. And I think. It's, it isn't just about adding new technology and features.

It's about rethinking the entire membership experience around identity status, and I would say community.

Mark Chouek: you are one of my favorites, Jay, because I you challenge a lot of my thinking and sort of almost confirm, more of it. So we'll come onto loyalty in a big way later during the session. But I don't actually I've come to the conclusion that if I was being really pragmatic and speaking exactly how I feel it without being in fear of getting on, on, on marketers bad Christmas card lists, I actually think that I don't believe in loyalty.

I do believe in what you refer to as membership. So I used to go, I don't believe in brand loyalty. I think I believe in convenience and

And habit. But I think you, you have challenged that in, in, in the time you and I have been talking. 'cause I do believe in membership and belonging. I do believe

Jay Myers: Mm-hmm.

Mark Chouek: if you, it's like joining a club and keeping the triggers to keep it to, to, to retaining that membership live and meaningful.

Just on, in terms of what you were saying, in terms of how COVID hit, was there ever a really good. Broad sense business balance between concentrating on retention versus re acquisition or, and is that changed? What are brands struggling more with now?

Jay Myers: Yeah. Actually, sorry, before I answer this, Susie or Nike do one? Do one of you guys are one of you not unmuted or one of you not muted? I'm hearing an echo.

Mark Chouek: they both look muted.

Jay Myers: They both look muted. Check check, check. Okay. Maybe it's just on my end.

Mark Chouek: Is it an echo on you or an echo on

Jay Myers: It's very faint.

Mark Chouek: very faint. Let me just shut my door. Let's see

Jay Myers: no, I think it's okay. No, you got headphones on, so it should be fine. Okay. All good. It's, I don't think it'll pick it up in the recording, so I just wanted to make sure they were both muted, okay.

Mark Chouek: So a balance between acquisition and retention is, was there ever a really good sort of rule to live by? And is, has, is that now changing?

Jay Myers: so this is one of the questions that comes up often at every subscription and e-commerce event I go to is like, what's more important? Acquisition, retention, you know, it used to be people are saying that it's shifting towards retention and, you know, the economy is tightening up and so maybe retention is more important.

And a couple years ago it was all about acquisition because acquisition was cheap and you could get customers inexpensively on paid acquisition. But I'm gonna throw out a little bit of a plot twist here is I don't think. The two are two different buckets. I think they are completely part, they're two sides of the same coin. And the biggest problem brands have with retention is actually their acquisition strategy. And when you have a poor acquisition strategy, when you're targeting the wrong customers, when you're acquiring them the wrong ways, when your offer is not thinking long term, it's just thinking one time conversion.

And then once you maybe do get a customer, you have a horrible onboarding experience. Or maybe not horrible, but lack of, that's the biggest part of retention. You know, retention isn't just stopping them when they click cancel and offering them some kind of offer, like that's in, that's important.

I'm a believer in having cancellation flows and all that, but that's not true Retention. That's like last ditch effort. True retention starts, you know, I say when someone subscribes to a product, you don't actually have a customer. You have a lead. You have someone that's trying out your product, they think they might want your, whatever it is, your skin lotion, your protein shake, whatever it, so they hit subscribe, but they're not a lifelong customer.

They're actually trying it out. Now your job is to educate them, first of all, on everything about that product. The second they hit subscribe, the onboarding. You know, here's a little kind of my personal take on onboarding. The second someone hits. Complete order on checkout. Like there, there's been studies done that there's endorphins released, that dopamine hit.

It's like this peak moment of excitement. The second people click checkout. And I joke with my wife about this 'cause we've actually we bought stuff online and, I dunno, a piece of furniture or something and I get it in the cart and we're both like, are you sure you want it? And maybe it was like a big item okay, come on over here, let's click checkout together.

Okay, we click checkout and yay. It's this, it's, you feel it, right? And it, there's actually people shop the same way that people use social media. 'cause it's dopamine hits, right? But what happens right after you checkout, most brands just take you to a vanilla order confirmation page.

And you might get one order confirmation email. You could probably send that customer four emails in the next. Six hours and they won't get upset because let's just say it's the pro you know, vitamin shake, whatever. It's, it could be a couch, it could be anything, but you could send them an email the moment they get it.

Actually the first email that goes out, you need to actually reinforce the decision they just made. It sounds crazy, but because they just went through your website, they just read all your material, they just made a decision to buy. But you need to tell them again why it was such a smart decision.

Because what you're actually doing is you're solidifying that and you're also slowly turning them into brand ambassadors. You're educating them about the product, but you need to reinforce it. Then the next email, one hour later, or even 30 minutes later, is. Three amazing case studies of other customers.

Here's what you can start to expect. Like these are three people that we've gotten to know over the years and they've used our protein shake and this is what's happened to them, their skin and whatever. And then half an hour later, a behind the scenes of your company, tell 'em about how they make it, how whatever list goes on.

Like I could do a whole talk about ideas for sequencing, but the point is, you can get away with probably four, five emails that first day. And they're not gonna unsubscribe because they're so excited. But if you wait a week, if you send one onboarding email or order confirmation email, and then the next one goes out seven days later because someone on the marketing team said, we don't wanna over email let them unsubscribe.

If they don't want the emails, that's fine, let them unsubscribe. But you're missing out huge. If you don't take advantage of educating them on the product. So by the time they actually, that product arrives at the door. They already feel a connection with your brand. They already feel like they know you.

They're, and there's a placebo effect too, right? To, to anything. If you start talking about a couch and the leather and how it's made and how the quality of it is different, how it's treated and whatever, you're gonna appreciate that leather more like they, they say like when a sommelier tells you about a bottle of wine, it, and then they do taste tests.

People always rate it higher when they, when, you know, when you're educated on it. That's all part of retention, but people bucket that as acquisition. And so getting acquisition I think is the biggest driver of retention. So it's a great question. What's more important retention or AC acquisition?

But I actually think there are two sides of the same coin.

Mark Chouek: Yeah. I mean, it's amazing that we try and stick to these rules that seem to make sense logically, but not emotionally. For example, at Orbit, Lex, we're running two podcasts at the moment. One's called CMOs Under, or Marketing Under Attack, and once called Do More With Less.

And we were having this argument with ourselves about you know, let's not email twice about the same thing because there's two different emails, two different, it go to the same people we might have. It's put them in the same email, show them that we're doing these webinars. We're not spamming them.

If the content is really good, that's not spam. That's like really, yeah. These people have literally signed up. Tell me, how long does it take before a subscriber? It goes from being a lead to a customer in your mind?

Jay Myers: I would say on the third recurrence there I would, you know, if you wanna celebrate a win, if you have on your wall. We got ex subscribers. We have so many, like once someone has stayed around for at least three recurrences, some people would say four. They call it the seasons. It's like until someone has stayed around you, like they say, like when you're when you're married or when you're dating someone, when you're young, you're not really with them until you've stayed through them through all seasons.

'cause people are different in the summer and the winter, but there's something to that effect for, with subscriptions, it's, you know, and there isn't necessarily seasons, but there is a cycle and I would say at least three cycles. The first one they're trying, the second one, they're like, okay I didn't cancel it, but I'm getting it again.

The third one is, okay, they're a customer now, they're still not a lifelong customer. They still, if it's only about the product that will keep a customer roughly we see on average six or seven. Cycles before they generally hit subscription fatigue. So brands that only what I would say they only have the value of the subscription is the product they see around six to seven months, average lifespan of that customer.

But brands that layer in value, brands that have, now if you're a subscriber, you start to get access to something on your site. You start to get VIP pricing. You start to get, there's events, maybe this health company is, runs marathons or does yoga classes or does something in, in all the towns. And now you get access to it.

You start to get exclusive access to products or earlier access to products you start to layer in value. It becomes not just about the product, that's when they start to get really sticky. And that's when you really get customers that stay around forever. Would you ever cancel your Amazon Prime membership?

Probably not, because it's not even about the free shipping anymore. You've got a Prime account, you watch prime tv, you've got prime video storage, you've got probably got an Alexa. You've probably, you know, there's no way you're gonna cancel it. They've layered in so much value, right? So

Mark Chouek: So there is a definite sort of art and science to holding off subscription fatigue,

Jay Myers: A hundred percent. And you know, if you want a rough, and I'm not a huge fan of here's a formula to eliminate subscription fatigue, but here's a formula to have a good chance of not having subscription fatigue, and I would call it three x perceived value over cost. And what I mean by this is, say a subscription costs $49 a month.

Perceived value is really, when I say perceived value. It's what a customer perceives value. Like you might like a Louis Vuitton purse means nothing to me. I could care less if it's $5 or $5,000. To me, it's just a bag. But to some people that's worth thousands of dollars because they perceive the value in it.

Okay? Netflix, arguably, if you paid a million dollars a month, you're still getting a deal because if you added up the cost of all the movies in there, if you were to rent them all or pay for them all, there's more than a million dollars a month. But some people don't wanna pay $15 a month because they don't watch it for a little bit, and so they don't perceive the value.

So there's no such thing as true value. There's only perceived value. And perceived value of a subscription should be at least three times the actual value. And so let's say you have a $49 let's call it the hell shake. It could be skin lotion, it could be anything. What else can you add to it to make it feel like $150 now so that maybe every month.

When the subscription goes out, they get an offer that says, Hey, your subscription's about to come out. Here's 25% off next month's or some other product on our website. You get access to early products. You get member benefits. We didn't even talk about that, but sorry, partner benefits. So because you're a subscriber, you get access to 10% off at these gyms and these yoga classes, and it all starts adding up.

If someone said, what is the value of an Amazon Prime membership to you, you may if you started adding up Alexa Prime video storage, this, it's like hundreds of dollars, but you pay a hundred a year, right? So three x is a good marker and you start to think about everything that a member gets.

It should feel like at least three times more. And then I would say you're on track to having a very sticky subscription.

Mark Chouek: And that's really powerful because that perception stretches to things that you really can't add up. So I don't know about the. I suppose that the equivalent of the health shake would be, listen, I feel healthier and therefore perform better at work. But certainly in the Amazon and Netflix examples you gave, it's like giving up Amazon and Prime means that suddenly my family doesn't do that thing where they sometimes gather round Alexa and do Harry Potter quizzes and stuff.

Do you know what I mean? And it's yeah. So that perceived value stretches to experiences as well that really don't have a specific monetary value, but you see it happening in front of your face, right?

Jay Myers: A hundred percent. I mean, let's say those, the health supplements, maybe one of the benefits they get is they get access to a health coach. They get weekly, emails or access to PDFs, downloads, eBooks on, you know, the, obviously someone's trying to get back on a healthy track in life. So if like once a month maybe you had access to this health coach with all the other members and you could ask your own question or they had a there's huge value there.

It might not even be about the supplements. I might go even buy the supplements somewhere else, but I still want that access. And so you can actually, I mean, in a perfect world, the subscription is not even about your product at all. It's about everything else. And I call it like a membership ecosystem really.

And then when you start thinking about subscriptions as getting the customer in your ecosystem, so what is your ecosystem? What is like all the benefits that they can have, then they're, then that's a, that's a member ecosystem and that's. The net, like subscriptions 3.0 or whatever we want to call it, that's the future.

That's where customers are all in on a brand, and the more touchpoint they engage with each one is like a tentacle that brand has in you and will keep that customer around much longer than just if I get my product every month.

Mark Chouek: So listen, we're gonna talk, I mean, you've led me onto something that I hadn't thought of before and I really wanna cover it 'cause I think it's really interesting. So I know where we are in the grand scheme of this session and the inter and the questions we're on. But can I just ask you, in, in everything you've just described, everything you've just described, I'm thinking about the marketer and the marketing's role in this and the marketing team's role or functional role is I want you in my ecosystem, whatever I give you, it's worth more to our business model to keep you in for another six months.

Even if I give you access to this and 10% off that, there's lots and lots of memberships and partnerships and that means I have to do deals with other brands and other, you know, the 10% off the gym. So I need to speak to their marketing department, make sure it works for them, and set that up. And marketing's role is membership or subscription marketing.

Very different. Because we're gonna come onto a point in this discussion, Jay, where we're talking about subscriptions and memberships as possibly being the de facto future of brands, right? So is membership and subscription marketing its own specific skillset, and is it a skillset that's widely understood or do we need to mo, do we need to kind of add it to a whole list of other marketing disciplines that are far more accessible and under, is it its own thing?

Jay Myers: I would argue that it. Is more important than any other aspect. Membership the treating, how you treat your, how you market to your members is more important than any other aspect of your marketing team. And here's why I think this right now, if you look at most marketing budgets, so salary spend

Mark Chouek: technology

Jay Myers: everyth technology, roughly 80 it ranges between 70 and 80% is spent on acquisition.

So paying to get customers, ads, events, things like this acquisition. You have a small percentage spent on retention, but typically retention being saving the customer. Think when you go to cancel your cell phone or your cable bill, they'll have a person that calls you and offers you something like, so there's some budget there.

It's usually around five to 10% of the budget, maybe 15 at the most. But it's kind of like a. Save. I wouldn't call it retention, but they, it buckets under that category, and then there's a very small percentage. It's anywhere from three to the most, 5%. For most brands, it's actually zero spent on like existing customer marketing.

There isn't even a title for it because it's not a thing. But the potential, if you, here's a crazy stat, I'm gonna give you two crazy stats. One is, if you increase retention by 5% of customers, you increase at the bare minimum, you increase your revenue by that same cohort, 25%. It's a weird math thing, but if you punch it into chat GPT and ask it, say if I have a cohort of subscribers and I increase retention 5%, your revenue goes up 25% and it'll actually tell you it goes up 25 to 95% because it depends on. I guess a number of factors, but and the second thing is members are way more likely to refer other customers than one-time customers. And I don't think people understand the importance of customer referrals. We see the majority of subscription brands, we've had, I don't even know, probably 150,000 stores use our subscription software. would say 90% of them have a growth rate that goes pretty good, gets to a point. And then they flatline, I call it the subscription death curve. And it's not just brands using us, it's SaaS, it's software companies. It's subscription companies in general. And what happens is if you can acquire. A hundred new customers a month, and if you have 5% churn, that's amazing.

Most are around between eight and 10% churn. But you'll get to a point where if you have a thousand customers a month, or sorry, if you have a thousand customers and you're acquiring a hundred a month, where your churn and acquisition level out. Now if you're getting a thousand people think, oh, I just need to acquire more customers.

All that does is it makes it flatline at 10,000 customers instead of a thousand customers. If you acquire 10,000 customers a month you just flatline at a million customers a month. But you will always flatline. And then people think if I reduce churn, maybe I can fix my flat line.

What churn does is it moves the flat line out further. So if you have a 10% churn and you reduce that to 5% churn, now instead of flatlining at a thousand customers, you're after like. I dunno, 12 months or eight months, you're now just pushing that out to 24 months. And actually I've done talks on this and I have graphs that show all the different scenarios.

So the bottom line of it is increasing activation just moves the flat line up, reducing churn, moves the flat line out the only way. And then we have a few brands that have that kind of what we call in Canada, the hockey stick growth. And so the only way to break out of it is when you have avir coefficient of one or greater.

And what I mean by that is if the, if on average a customer refers at least one or more, now some customers might refer five, some might refer zero. But all you need is for your average customer to refer 1.00001, and you will have growth like this. That's all it takes. And the effect of it is insane. If you increase.

If you take a customer, I'm going off the top of my head on the numbers here, but I believe they're accurate 'cause I've done this talk a few times. But if you have a, if you're acquiring a thousand customers a month and you go from 15% churn down to 5% churn after 30 days, you change your number of customers from roughly around I think it's around 2,800 to roughly around 8,000.

So you get like 4,000 more customers and that's a lot of work to reduce the churn that much. But if you increase your customer referral rate from 0.5 to 0.8, just meaning 0.3 more on average, you go from 2000 to, I think it's 38,000 customers. But then if you get that up to just one, oh over one, it's actually insane that after I think it was 30 months, you ended up with, it was like 300,000 customers.

It gets insane 'cause it starts multiplying, right? You just have to get above one. And so it's so important to get customers. I mean, there's a, you could do a whole talk on the strategy of how do you get customers to refer. I have a lot of thoughts on that, but one of the most important fun.

Mark Chouek: and this is just straight referral. This is me telling my friend, I love this, by the way. You should try it. I let me send you a form. That's all you need.

Jay Myers: No, that's not all you need. So that's what people think you need. People think you need the 10% share. 10, get 10. Here's a coupon for 10% off. Those don't work. Those will only work. They'll just get someone who's referring someone. Anyway. If I'm gonna refer you anyway, and I'm talking to you in a conversation like, oh, you're signing up for HelloFresh, or some meal plan, oh, by the, oh, you know what?

I have a 10%. I'll just give it to you because you were signing up. It doesn't. Motivate me to go outta my way and talk to anyone about this. I'm not gonna go, if I get a subscription and if I find out I can share it and give someone 10% off. I'm not gonna go call 10 friends and say, Hey, guess what?

I got a 10% off coupon. Do you wanna join my skin lotion thing? But you know what would get me to share it? Did you join oh, what was it called? The oh, that talk, that talking app during the Pan Pandemic,

Mark Chouek: Oh, clubhouse.

Jay Myers: club. Clubhouse. Clubhouse, yes. Sorry.

Mark Chouek: I joined, I got somebody's code and joined and sort of never really engaged. I was off it within seconds.

Jay Myers: yeah, it, you know what it Twitter ended up launching Twitter spaces and it was kind of a, had a short lived thing. They did, but they, there was something, there was an interesting phenomenon that happened with Clubhouse. You couldn't, you, like you just said, you couldn't just join, someone gave you a code to join.

When you did join, you only got five invites. And it actually only worked on iPhone. It didn't even work on Android too, which like, you'd think, like you'd think if I want something to grow virally, why would I limit the number of invites? It makes no sense. Like I, you would think if you're building a software or if you've got a skin lotion, could you imagine only allowing your subscribers to invite, they only get three invites?

That would seem weird. Like your chief, your CMO would say no, we don't wanna limit invites. But it actually, there's a ton of data that has shown that limiting anything, like even limiting people to get into into webinars, into sales calls, into anything. Like it's, there's a huge psychological benefit of doing this.

So imagine you get a subscription, so that same person not the 10% off coupon code, but they subscribe to the skin cream and they see an offer where, mark, you I, you get three coupon codes to give three months free. To someone for the skin lotion, not 10% off, three months free. That's incredibly valuable.

Now what are you gonna do? You're gonna go out and you're gonna actually, because it's so valuable, you think you're doing your friend a favor, you're probably gonna find someone that is an ideal customer. Like you're probably gonna reach out to your, a family member or friend who maybe has dry skin or has eczema or something and you're gonna say, Hey, you know what?

I just totally out there. I know you, you've mentioned dry skin in the past. I just signed up for the skin subscription and I only have three, I got three months free. But I wanted to check would you use it? So then you're getting that customer to actually, yes, I would use it. So you get them that the referred customer is starting to say yes, they feel like they got something exclusive.

You're finding the ideal customer, which probably gonna have 10 times higher, LTV, because that person has a skin problem. That person feels thankful that they got it. But three months is nothing in terms of customer acquisition costs. That's nothing. So now you're getting the ideal customer and what is the best referral source?

The nothing is better than a personal friend. Yes, influencers are important and TikTok creators and all that, those are, that is important. But nothing is more powerful than your best friend saying, I just started using this skin lotion and it's changed my life. I like, nothing's more powerful than that.

And so you're tapping into that and I could talk a lot about this, but to go back to, I can't even remember what the original question was, but oh, marketing departments and I would actually say if I was a subscription brand. I would be tempted to make it invite only. I would open, I would potentially open it up to maybe a th the first a thousand customers get in or I open, I allow a hundred new signups a month.

I don't just allow anyone to sign up a hundred new or 500 new signups a month, but each person who signs up gets three invites. 'cause remember, you only need 0.01, 0.001, and then you've got viral growth. So some people might refer zero, some might refer three, but you can play with that. And I would probably put 80% or 90% of my budget into thinking about the I call it retention, but it's not saving them.

When they click cancel, it's actually building programs that help them grow. And yeah, I do think brands are, I wouldn't say getting it wrong, but they're spending all their money on the front end and those customers are falling through a leaky bucket when they have what they want. But they don't have the right programs to get them to actually grow your subscription program.

Mark Chouek: your amazing. Tell me about ai. I don't really need this whole conversation to go in a ai direction. I don't think it's I don't feel like it's, merits being a big chunk of this conversation, but it would be re like weirdly neglectful if we didn't at least ask. So AI's ref for many is redefining a customer experience and maybe even product discovery.

Is social media still doing what it was doing before as a kind of powerful player? You've talked a lot about obviously advocacy, like customer advocacy as a powerful tool. If you can pull it, pull that lever really expertly. What is going on with ai. That is that, that if I'm a subscription marketer new in my job and trying to sort of download everything, you've got to make me really effective.

Should I be looking at AI and sort of whispering AI up the boardroom sort of journey and saying this is gonna be our big play.

Jay Myers: I, you know, what excites me about AI isn't necessarily you know, replacing humans and, you know, I, it is exciting that it speeds up processes. I use it on a regular basis. But I think AI acting like a digital concierge when you have a subscription or when you're a member I think that's what's really interesting and has so much potential.

And, you know, we're dabbling with it at Bold, like we're. A customer who subscribed to a specific product. We use AI to recommend certain products in their customer portal and in their upcoming emails. And you know, every subscriber gets a different recommendation. But when a customer feels, I mean, there's a ton of data points that personalization the effect that it has.

Actually, I had a couple stats, like it's something like, yeah, 80% of customers are more likely to buy when there's a personalized experience versus not. And 76% of customers, subscribers actually get frustrated when they feel their subscription isn't personalized. Like they expect it. Actually I was on Amazon a couple days ago.

What was I buying? Oh yeah, I was buying iPhone cables, like charging cables. I had it up on the screen, but I didn't click add to cart. And then I opened Amazon and I just. In my head, I just expected it to be on the homepage, continue shopping. I didn't, I, and it was there and I just expected that because Amazon is great that way.

If you look at something, it stays on your home tab, right? And I, if it wasn't, I would've been slightly disappointed. And I think with subscription membership, AI actually has a ton of potential to really improve that experience. So you look at certain products on the site, now, imagine having that product recommended in your customer portal for a discount on your next upcoming subscription, things like that.

Mark Chouek: But it still has to be driven by psychology, which AI currently doesn't really have.

Jay Myers: correct. I do. No I mean, I think AI can definitely help. I think, I mean, the psychology. When it comes to like monitoring, behavior making I mean we're dabbling in this, right? As we speak right now with can we predict can we predict when customers want their next order, right?

Subscriptions are great, but do you actually need your protein powder every 30 days? Do you actually need it? Or do you need it? Can we do frequencies vary? So it's not just products, it's frequencies. It's a number of things. And so I think AI can definitely improve the member experience from products, from frequencies to a number of things.

Like I, so I'm, yeah I'm like you I do think it's I wouldn't over, I wouldn't put a ton of. Wade into it. Yep. I am very excited about what it will do. And we're investing heavily into it in our products, but I still think at the end of the day, like crafting great membership ecosystems is the most important thing.

And then AI will improve that. It's not going to do it for you, but it'll improve the experiences that you've created.

Mark Chouek: And is that ecosystems bit why you love subscriptions so much and why you think it can be an answer for any kind of brand looking for new sort of predictable growth? I mean, 'cause if so we're talking about a real cornerstone in the new, we're talking about consumers moving further and further away and putting more distance between themselves and a legacy retail model Subscriptions.

You kind of, you, when you talk about subscriptions, you take it away from a kind of really static blunt. I signed up for this a year ago. I got it through the door. I just can't be bothered with, it's more hassle for me to go on and whatever you turn it into this kind of, when it's used. This ecosystem that's built around me and built around my needs, and they're always surprising and delighting it's subscription.

Your retail model, is it what you think can be the answer for anybody?

Jay Myers: I would say yes. I would say membership you know, we use the word subscriptions a little bit interchangeably. I wanna just clarify a little bit of this. Like I see sub, someone listening might say I don't sell subscriptions. I don't have a product that's replenishable. I still think that the concept of membership is important for every direct to consumer brand to, to get right.

I think it's critical. Now. Subscription is often a component of that. A concept of VIP, a concept of rewarding customers, a concept of access, a concept of all these things. I love subscription because I think it's one of the only mechanics in e-commerce that truly create a good experience on both sides.

What I mean by that is if I only sell products one time and all, I'm I, and I know brands that do this they actually, I know personally a couple people that do this they go to China every year and they go to these fair, the Canton Fair is one and there's a few others, and they source products and they'll find something like a.

A USB fan for your phone. You plug it in and it, you can put it on your desk and it'll fan you or something like this. And they white label it. They get, they buy it for 70 cents. They put their logo on it, and they put some packaging. They get a whole bunch of influencers. They ru they put about a million dollars of ads on Instagram.

They'll pump it out. They'll sell it for 39 99 each, or buy two for 59 or buy three for 65, get whatever. You see these ads all the time. And they'll make 10 million in a year. The next year, it's another product, and if you've ordered from them, you'll order it. And you'll always know that it takes five to six weeks to actually get, and it's not coming from like FedEx or UPS it's all coming through a container and it's a horrible experience.

They have no customer service. It's like arbitrage on one time products, find something, pump a lot of ads into it. This is not a great experience for a customer. Like I've, I've been a sucker of these at a few, like midnight Instagram Scrolls. I've seen something. I bought indestructible suit shoes one time.

My wife still laughs at me. It was like something like a nail, can't puncture them and all these things and ordered it and the things feel horrible to wear and took six months to come. But it's a horrible experience. Subscriptions like you can't do that to a customer. You can't have an experience like that with a customer and expect to have a subscription company.

It has to be the first time that product comes. It has to be magical. The onboarding has to be great. It has to be on time, it has to be as promised, or like you're never gonna get to month two. And so it's engineered to be a good experience for customers and for brands like, brands love the long-term, predictable recurring revenue, and customers love the long-term predictable relationship and the long-term predictable experience.

So I love subscriptions because it really creates like I love being a describe. I love being, when a brand knows me, I actually like it. I love the recommendations I get. I love being a part of, I'm a number of, I subscribe to everything because we have a subscription product, so I'm always subscribing.

And I the ones that do it well I genuinely love being a subscriber. They're easy to manage, they're flexible. I get all kinds of insider perks. I'm members of communities and I love it. I, and so when it's done well, it's a great experience on both ends and that's why I love subscriptions so much.

Mark Chouek: So then it's, talk to me about loyalty, how we're talk. If we were to try and define what customer loyalty does and can mean in 2025, if it used to be all about points and discounts and brands are now experimenting with memberships and VIP programs, where are we up to with what loyalty really means in e-commerce?

Like how has it changed and where are we at?

Jay Myers: Yeah, I mean, I don't think this is gonna be a shocker to anyone that say loyalty isn't about loyalty points anymore. I think we've, hopefully everyone's kind of moved past that and we understand that. I would say, you know, like even just a few years ago, people would say it's not just about points, it's about getting customers to repeat buy and repeat purchase.

And I actually think it's not even that. It's when customers, they choose your brand over and over, even when they don't have to. But it's also when they choose to engage, it's when they choose to advocate your brand, it's when they choose to be a part of your community. And so I think. It's actually interesting.

I don't think a lot of the measurement tools are out there yet for measuring true loyalty. So I can tell you what it is. You know when a customer leaves a five star review for your products on multiple places, when they refer a friend, when someone posts about it on social media and they comment on it that in a good way.

When you post something and they then they're liking your post when they're active in your slack groups, your discord groups, your Facebook groups, when you know all these different touch points, when they engage, that's a loyal customer, right? We, it's tough to measure some of that, right?

So we kind of default to, we measure repeat purchases, which is a loose proxy. We measure customer lifetime value, which I still think is important. But it's not a true indicator of loyalty. And actually, I think you said this to me one time. You have six pairs of the same pairs of Converse shoes.

And it stuck out to me when you said that because you said you would switch in a heartbeat if you found another pair just as comfortable. It's just they fit. I don't, would you might not be loyal to converse, it's just you found a pair that fits and they look good. But are you engaged in all their communities?

Are you going to converse events? Do you, if you see a friend wearing Nike, are you, it's not like Ford versus Chevy oh, you're wearing Nike. You probably could care less. You're just like, you, like Converse or you, they fit you. But someone who's truly loyal who sees someone wearing another shoe type might even actually be like, Hey, you should try these.

I feel like that's a great example for this.

Mark Chouek: yeah, I I feel like I, I'm stuck between believing in loyalty as to brands and not I think that possibly one thing you've hit upon is that all the best proxies we have for measuring it feel to me like they're too blunt. They just, if they were to write to me and say thank you for being one of our loyal customers, it's almost I'm not, I'm, it's just convenient.

It suits me to, you know, converse all star. I've had, like I said, in my wardrobe since I was a kid, and I think, I happen to think they make me look 10 years younger and about se and about seven years cooler. But I but I reckon, like I went to a football match the other night. I was in Liverpool, my hometown.

I went to a Liverpool football club match, first game of the season. Very rarely use the club shop because like I'm a 50-year-old man who doesn't look like a, an elite athlete. So wearing a shirt isn't gonna be a good look on me, but I'll wear I'll buy the kits when they're cheap, when they're being sort of replaced and they're going cheap.

I'll buy the kits for my kids if they want, but the other day we there was a whole bunch of things that came into it. Firstly, first game of the season, second one of our top stars died in a car crash this summer and there was a lot of emotion around the game. Thirdly, they've just switched from one kit supply to another and the kits and the training kits this year are absolutely gorgeous.

So I bought myself a tracksuit top, like a zip up tracksuit, top three stripes down the side. Like it made me feel like the sort of stuff I used to wear in the seventies and eighties when I was a kid. And and and it looked great on me. And I'm like, so if I'm loyal to a brand, it's like I'm loyal to my family, then I'm loyal to Liverpool Football club.

Like you can't get me off that. Am I loyal to the rest or is it just, you know, I dunno I'm struck between it. But then it might be because like you said, it, I was on fan groups and yeah, you could call me a loyal customer. If I was Facebooking social mediaing trust piloting, trip advisory and referring then sure.

I'm a loyal customer.

Jay Myers: I think I think the fundamental problem with loyalty when it comes to brands

Mark Chouek: is

Jay Myers: is true loyalty. If you think about loyalty, like some, if you think about someone your loyalty, it's often because they've done something for you. If someone's sacrificed for you, if they've gone outta their way for you, if they've done some, been extremely kind to you, like someone who maybe like you fought with or you went to war with, or they sacrificed their time, like coach or something like. really one of the only ways to create true loyalty is when someone does something special for you. It's very hard to do as a brand. Now imagine, 'cause it's all transactional. It's like you do x you earn these loyalty points. We shouldn't even call them loyalty points. It should be kind of more like incent incentivized points or something.

But imagine a, a human, imagine a girlfriend or a friend or someone saying, if you do this thing, I will give you x reward. I'll give you a kiss if you do this or I'll do this. If you do, you're never, there's not gonna be loyal there. It's transactional. So it doesn't make sense with people. It doesn't really make sense with brands either. Now there are some ways I think that are interesting to actually create a bit of a sense of loyalty with brands. And I think, you know, I. I always I tell our customer support team at Bold all the time that the best opportunity that we have as a company to build loyal customers is when someone emails in and they're angry on a support ticket.

Not when someone's happy, not when they, like, when things, when someone installs an app and things go exactly normal, we don't really have it. It's hard to turn that person in, even though we think that's a, that's an awesome experience. It's actually hard to turn them into a raving fan. But when something goes wrong and you go out of your way to make it right, you will have someone raving about your brand.

And I've seen it over and over, and I've seen. Those are when people go and they post on social media. Those are, you know, I tell the story a lot about my, I had a, my sister-in-law one time up in Canada, we've got a coffee chain called Tim Horton's. It's kinda like Starbucks and it's she went through the drive-through and she ordered drinks and sandwiches.

It was kind of like supper. She had a bunch of kids and so she got her bags and she drove home and opened it up and I think there was like, the donuts were in it, but none of the sandwiches. But I guess she didn't notice when she was driving. And so she got home, opened it up and the sandwiches weren't there.

And so she tweeted something like, thanks a lot Tim Horton's. Like, all you had to do was put the sandwiches in our bag. Now we have no dinner for our kids. Like some kind of angry tweet. I can't remember exactly what it was. Tim Horton saw it dmd her. Apologized and asked her where she lived and said, we're gonna get someone from the store to drive it to your house.

And they drove the sandwiches to our house. And you know, here I am years later telling the story and she's told it multiple times. And a, when you have some type of an angry customer, believe it or not, that's the most amazing opportunity to create a loyal person. B, if you don't have a loyal, a ra, an angry customer, I still, I think you can create these opportunities.

And here's a good example. I, you know, we talk about loyalty points. Think about a coffee shop. Imagine a co you know the punch cards. You buy 10 coffees, you get the 10th one free. When you get the 10th free coffee. You don't go tell all your friends, I got a free coffee. You just, you earned your coffee right?

Now. Imagine that store had some way of still tracking that you've bought a bunch of coffees, or maybe the barista has seen you come in 10 times and you know, or just randomly, it doesn't have to be 10. It could be on the seventh, it could be the 11th. But imagine you walk in and you order your coffee and the barista says, Hey, this one's on us today. You'd be like, what? Oh, thank you. Okay. Wow. I'm gonna come here all the time and tell my friends about this place. That's amazing. You go home, you know, guess what? I ordered my coffee from Starbucks and they just gave me a free coffee. You would tell everyone, but no one does that with the Starbucks points programs and everything else when you get your free coffee.

'cause it's expected, it's transactional. And so if you can create ways where you surprise and delight your customers. Mind blowing the effects that can have, not just on their retention, but on then the referral rates as well too. And I think baking that into your customer experience, even though it's planned, it feels like a surprise to them.

So don't say after your third month, you're gonna get, I dunno, say it's that protein shake company, you're gonna get a free shaker bottle. Don't say that just on the third month. Include a separate box in there with handwritten note. It's actually very easy to do handwritten notes these days. You can tool tools like handwritten.

There's a bunch of others that, like mechanical pens that write them, put in a picture of your team. This is on us. Thanks for sticking around for three months. We wanted to throw in a shaker bottle for you. Little things like that go incredibly far. One last great example I have of this is Chewy, which is like the dog food pet company.

What always happens with a dog food subscription, eventually the dog dies. And when the dog dies, what usually happens is the owner forgets to cancel their subscription because it's the last thing on their mind. And what happens is they get their dog food the next month, and it's a kind of a bit of a painful reminder that their dog passed away.

And, you know, a lot of subscription brands maybe won't even refund you. They just, the customer goes in to cancel or they call, can you refund? Oh, no, I'm, you know what? I'm sorry it's shipped, but we can cancel the next one. And they call Chewy and Chewy says, oh yes, of course, we'll refund you. And you know what?

Keep that dog food give. Don't worry about sending it back. We're just gonna refund you. And then the customer feels amazing. Oh, thank you. I don't have to worry about the hassle of sending it back. And then a week later, or a couple days later, they get flowers delivered. Because Chewy, chewy knows the address.

'cause they've been a subscriber, they knew that their dog just died. So what they also do is they send a 20 or $30 bouquet with a little note saying, we are so sorry to hear about. Maybe they know the dog's name and nothing will replace, only the memories. Some little nice word. And they send the flowers like, then the customer's holy cow.

Now what happens to most people that have a dog pass away? Like it's something like 80% of 'em get another dog within two to three years. So where do you think they're gonna get their pet food? There's no loyalty program in the world that could have earned that than what Chewy did after their dog passed away.

And so I do think there are things you can do to create a bit of a sense of loyalty, even though an e-commerce brand would never die for you or stick out their leg for you, like they'll. You can do things to actually surprise them. And so if you started to think let's take some of our customer acquisition costs and let's put a budget towards doing kind things for our customers, you might be blown away on the effect it has towards actual true loyalty.

Mark Chouek: You make me want to start my own business again, Jay. I've had businesses in the past and we've tried, but I would, if I did, I would definitely put like a kindness budget in there and make sure I'm doing things that aren't necessarily expected or counted. Listen we talked a lot about you and I in the past about the buyer brain and in the last half hour we've talked about psychology and delight and surprise, and we've talked about convenience and a different version of loyalty and how that can be created.

And we talked about business models and how it works and the maths behind the, like complex maths behind compounding future CLV and all that stuff. Tell me what you think about how do we define the modern buyer brain? If you were talking to a non marketer right now, or somebody with kind of led very much by the left side of their brain, for example you they might be and they're looking up from their spreadsheets and their sort of analytical reports to listen to you.

They might assume that if you, if I said to you now, tell this guy how consumers think, what do they typically expect of their preferred retail brands? They might just walk away with a kind of sense that, okay, so what I've taken from Jay today is that the consumer is incredibly entitled really fastidiously concrete in higher expectations every time, never lowering them and wants something for nothing and blah, blah, blah, blah, blah. That it can't be that simple, right? The buy, talk to me about. What Bold might describe with all your beautiful experience of thousands of brands running these great programs, what is the buyer brain like these days?

Jay Myers: Mm-hmm. I think first and foremost, it's important to know that the modern buyer brain is overloaded. It's impatient. It's craving connection. I think I. Consumers don't just crave convenience anymore. They expect brands to know them. They expect brands to to get ahead of their needs. I think it comes down to people are so busy, they're almost even frustrated when they come on a site and it doesn't feel personalized.

Personalized, they expect it. I do think that's why subscriptions and memberships really do resonate with the modern buyer is they remove friction. They simplify dec decisions. They make people feel like insiders. And I'm talking about subscriptions done well. There are subscriptions that are not good at all, and they're very rigid and they're hard to cancel and they're not good at all.

But a good subscription, I think does really tap into that fatigued, overloaded, impatient, tired buyer. And I think the more you can do to remove friction, make things as easy and convenient as possible, is probably, if you want to talk about manufacturing loyalty, that's maybe one of the most important things you can do.

If it's, why do you open Uber instead of Lyft? Or why do you open DoorDash instead of Uber Eats? I don't know if those examples are true for whatever, but there's always things in your life that if you think about it, when you need to take a note, you open a certain app versus a different app because there's just a little less friction there.

And you're, and that one extra little bit, is the decision making factor. And so it's really important to get to know your customers so you can personalize emails, you know, if they open one email. And if you are a man, and let's just say it's a athletic clothing line, and all the things are for women, you might not open their email again, but you have the opportunity to know that customer when they sign up for your email, you can look at products they're shopping in and auto tag them in your emails, whatever tool you're using.

You can ask them questions, you can have questionnaires. It's very easy to personalize things, but you get it wrong once or twice. And the customer starts to perceive friction and fatigue starts to set in. And that modern buyer brain will go the least path of resistance. And so I think if you want to think about what consumers expect the modern buyer brain, like in, you know, the, like now they expect personalization.

They expect control. They expect recognition is actually a big one. And they expect also purpose, I would say. I think they, they expect alignment with a brand's values whatever that is. And there can be different values. It's not, there's not like one overarching one that's right. But they there's been a lot of data showing that, especially in the younger generations, that showing where you donate money to or charities you're aligned with can have a bigger effect on conversion than discounts.

Actually we work with a company that does when you check out on the thank you page, you can pick where you want. It's 10% or 20% of your order to go to and you get to pick the charity. And they did tests where they sent emails to like 10,000 customers. Got an email that said. 10% off these products this weekend and the other 10,000 got an email that said this weekend, any orders you'll get to pick 10% of your order will go to a charity of your choice.

We're working with these five charities and you'll get to pick, and the ones that said you get to pick where your percentage of your order goes to converted more. So people care about that. There's a lot. I think though, that's if I had to sum up the modern buyer brain in, in a few words it's fatigued.

It's overloaded, it craves ease. It craves the least passive path of resistance. It craves alignment with values. It craves recognition badges. Like nothing, nothing is more valuable than back to the Louis Vuitton purse example, all that is, is a badge. You know, it's like, why do airlines name Silver Elite Platinum?

They could name their levels, level one, level two, level three. But we crave recognition as humans, right? So products are a form of recognition. When you buy something it's a status symbol. So anyways I think that's what I would say about the modern buyer brain.

Mark Chouek: And when you talk about control, there's something about being heard, listened to, and genuine generating the response you crave when there is a problem. I mean, I've been part of a subscription program or two where it's impossible to find somebody to talk to when you wanna change, or even not even just cancel, but actual question something.

And, you know, I was part of a in a, in one job, I was in New York every for a week, every month for about two, three years. And very quickly. Went up the Virgin Atlantic loyalty levels from red cards or black cards, silver cards or whatever. And the one time I really needed to get in the lounge 'cause I was absolutely exhausted and a flight had been delayed.

I needed to sit somewhere and be in peace. I couldn't get into the lounge because the last two, three months we hadn't flown because there wasn't a need. And my silver card that I had in my wallet had only been it was based on an constant accumulation of points. And I was like, you are talking to me about points.

I'm talking to you about sleep. They wouldn't let me out. I couldn't. I had to sit like in the concourse with people and children and noise and on a chair that was built outta stone, you know? And I'm like, dude, we're talking about two different things. I've been flying with you now for, I've literally been flying with you for two and a half years, month in, month out.

I, what are we do? What are we doing here?

Jay Myers: Yeah, you know what? That's the difference. The difference in that is principle versus policy. And I think good brands have principles, bad brands have policies. And so airlines is a great example for this. I one time remember asking an airline for the flight attendant for another pillow, and I, there was like a whole stack of 20 pillows up top and I said, can I grab another pillow?

I need another one by my head for the window. And she's I'm so sorry. It's our policy is one per person. I was like, but there's 20 up there and no one else is using them. I'm sorry sir. It's one per person. ' cause they have that policy. But if they had a principle that, if the principle is do everything you can to make a customer happy, as long as it's not at the detriment of another customer.

If that was a principle that a, would empower them to make decisions, the flight attendant to that would keep me engaged with the brand. Like it's empowering for the employees and it builds relationship and so I always believe in principles not policy. And so there's a lot that could be said about that.

But when, as much as you can as a brand, I think even like with customer support, if you have a principle that you can do anything, you know, zap, Zappos, the shoe company is actually kind of like where I. I don't steal the idea. I get inspired from, 'cause like they take it to the extreme. Like they have a policy that I think it's like each customer service rep can spend up to $500 to make a customer happy.

So they've been famous for they've sent cakes, they've sent, they, they've had like famous, if you just Google like Zappos, for those who don't know, it's Z-A-P-P-O-S. Google Zappos customer service stories. And there's a ton of them where like people have talked to the customer for nine hours on a call because they found out like they called to order shoes, but they found out that their, someone died and they ended up talking and this person was lonely and didn't have any friends.

And now nine hours on a call, like you would say that's like if you talk to someone for more than 17 minutes, we are losing money as a company. That's all we can afford our margins, like nine hours on a call we lost money on that customer. But if the lines aren't busy and if there's if everyone's getting serviced.

What's better? Talking to the customer or just sitting there waiting for the next call to get in. So they understood that and they grew as one of the fastest growing shoe companies in the history, and they were later acquired by Amazon. You know, I think that goes to policy versus principle.

When you have good principles, things like that should never happen. Like that experience.

Mark Chouek: the people that come up with these amazing, principles. Are they just really smart or are they brilliant retailers? Is this where retail's going?

Jay Myers: I, I wonder sometimes if it's, I think a lot of people have the intuition. A lot of people know what's right to do. They know. They know. If you're in a meeting and you're talking about sales strategy or a customer service strategy or how you know, in your heart, like what's right, but you're pressured because you're in a, you're in an organization that maybe has certain, like certain pressures and you have to have certain quotas and certain things.

And so if it's, I guess maybe sad in a, this is a bit more philosophical, but like often we have to work within a system and so we might know actually amazing things to do, but we can't, we're structured in it. And so maybe, you know, a lot of times when you do hear about these companies that have really done.

Unique things. It's when like the founder has complete control over the board. Like they've got veto power, they've got, or they're just there, there is no, they're not publicly traded. They can make decisions like this. They can do things like, you know, Unilever could never do something like that.

They have to like tight numbers. They report every quarter. But a private company could, and that's often how they like beat, beat Unilever and then Unilever will end up acquiring them. But that's like it, we see this repeat over and over. And I think

Mark Chouek: Dollar Shave people and the,

Jay Myers: totally. Yeah. I mean, un Unilever would've never come out with the commercials that they did 10 years ago with people in gorilla costumes and different things.

It would've been like, we can't risk that we're a publicly traded company. We have to just be, let's let the other companies do the risky things and then we will acquire them if it works. So I don't know that it's necessarily that. It takes some great level of brilliance to know and to try.

I just think it takes the freedom and like to empower people. I sometimes say to people at our company, I you know, if I said to you, mark, if you worked at Bold and I said, mark, I give you full permission to just be awesome, to do what you think is awesome. And I think sometimes people just need that permission.

I think they just need to know that oh, you we, I mean, how many times have you gone to a party and you come home and you question yourself? Did I say the right thing? Did I do the right thing? Oh, did that come across the right way? And you don't sleep at night. You wake up in the morning like, oh, I probably said the wrong thing last night.

We're human nature. We question everything we do. But if I just gave you permission, like Mark, just. Be as awesome as you want tonight, or whatever do be you. And if like you can apply that to how you work, I think. I think people can do amazing things

Mark Chouek: I love that. I would firstly, yes, thank you. I'll take that permission.

Jay Myers: you included.

Mark Chouek: Listen, we've talked about a number of things, Jay. We've got 10, 12 minutes left now. I wanna, we talked about the buyer. We talked about the potential for subscription programs to build and future-proof ecosystems, retail ecosystems.

We talked about the psychology of status and belonging a little bit. I mean, maybe there's a bit more there. And we talked about kind of fatigue with subscriptions and how subscription programs can differ. One's about making sure that you are building heart and instinct into the relationship.

And others are just about, you know, points and deadlines and, you know. How are you seeing subscription models of, certainly of let's you know, any of your clients increasingly engineering, not just retail and how retail works, but their own customer's retail habits. Are they actually changing the customers in terms of the way we purchase and the way we perceive and giving me more, you've talked about making, giving me the permission to be awesome, right?

And giving me the permission to upgrade or, you know, go and talk to go and talk to somebody because you did some amazing you know, Zappos or any of or Chewy. Did any of these flowers or the cakes, or the delight, the surprise? Are you finding that there's a power in membership models and subscription models to actually change customers' intents, increase their intent or broaden their intent in terms of. I if you read Mark Ritson and some of the big marketing professors, most of them would call bullshit. Any time you talked about a relationship between a brand and a person. As in they go, come on. There are no relationships. It's not people, it's not brand love. It's like brand. When I think of it and when I can be bothered, it's not the same thing.

But what you are talking about is about a stronger relationship as any it's give and take and it's like changing my habits, changing my intent. The way you describe it, membership models have that power.

Jay Myers: Yes. Here's maybe a soundbite that I would say is subscriptions don't just sell products. They engineer habits. I really believe that, and the data shows it because we know that customers who are part of a paid membership program, this is with Restoration Hardware, this is Amazon. This is like a number, like many companies have reported roughly the same numbers.

They spend on average four times more than non-paying subscribers. So yes, it's engineering habits. They are. According to McKinsey, 63% more likely to choose your brand over a competitor when they are part of a paid membership. And that's brand affinity. That's means that's removing price sensitivity. That means if they're part of your paid membership subscription program and now there's another product on your site or another offer, they're 63% less likely to compare you to a competitor to go and search.

They'll just buy it. So yes, it's engineering habits. They are, I believe it's 53%. That one, I don't know exactly off the top of my head, but was also in the McKinsey study, but more likely to refer a friend when they're part of a paid subscription. So I would argue that, yes, I mean, I would agree. I mean, to the point you made, maybe it isn't true loyalty, but it is definitely engineering habits.

So they're I would say subscriptions turn buying. Into a default behavior and they train customers to think in ecosystems and make your brand like the first stop when they have something else that they need to buy. So I think it's not just a revenue model, like it, it really is a behavior model.

And if you can, I mean if every time that customer, every month there's a transaction from you, they're buying from you, they're engaging with you, they're accepting offers from you, they're like you they trust your shipping. They know that you know their address. You know how to get a box of them that you're gonna be okay.

If they need to return something like it's building trust it, it definitely is engineering habits that will affect much more than just the subscription. I really believe that. And if you wanna take it one step further, I think if you can layer. Sunk cost into a subscription. And what I mean by this is any type of a paid membership where if you don't use it, you lose it Has an incredible effect on, on, on buying behavior, buying habits, or engineering habits.

So for example, this is a, if I earn loyalty points, like I'm a member of a airline and I earn air miles I earn air miles with almost every airline. I'm not one of those people. I generally will fly whatever, like time I wanna leave and what time I get there. And I don't worry too much about which airline I fly.

I know some people are very much in a certain, but versus if I paid, let's say a thousand dollars a month to Delta to fly anywhere in the continental United States. Now if I book with United, I don't just feel like I'm not earning my Delta points, I actually feel like I'm losing money. Let's say you have a membership program. Maybe you do a you know, tics has a model like this where you pay, I think it's $50 a month, and you get a $75 shopping credit every month versus earning points. Now, if I pay $50 a month and I get $75 shopping credit, now if I go and I buy something at Nike or Lululemon. I actually feel like I'm losing money 'cause I'm not using my money that I'm earning over here.

There's a lot of data about it's called the sunk cost fallacy. People make irrational decisions based off of costs already incurred it. People say it's why some people are stuck in a marriage too long because they we've been together for x long. People, it's why people don't wear 80% of the clothes in their closet.

'cause they bought it. They don't wanna throw it out. Even if they haven't worn it for two years, they paid for it. It's why, you know, we struggle with it at Bold if we've been working on a product for a year, but now a new opportunity comes out, like AI just comes out. There's the, we should. on something new, but our brains go to we've been working on this for a year, we've invested in it.

There's sunk cost and there's a, it's a fallacy and it means that people make irrational decisions based off sunk costs. So any way that you can get your customers to have sunk costs to earn is a huge effect on buying behavior. And I would argue it's one of the most, I, it is for sure the most untapped buying behavior that affects retail purchases that 99% of brands are not tapping into.

They're starting to, but they're, it's very early. So brands tap into status. I mean, we've tapped into status forever. That's why you buy, we've tapped into urgency, like limited time offers and you know, you lineups and drops and limited, we tap into FOMO and we've tapped into all kinds of other things that make people wanna buy.

But we haven't really, brands haven't tapped into sunk cost at all. Because it's been hard to do Membership, paid membership is one of the, and you might call it paid loyalty, paid membership. It all kind of falls in this bucket, but as long as it includes sunk cost, it's one of the best ways to tap into it.

And I think there's a huge opportunity right now to, if you can tap into sunk costs to to affect buying behavior in a very powerful way. It's one of the last you know, like psychological reasons people make decisions that's not being used for retail yet.

Mark Chouek: Are you have you got a clear vision of where if we were to fast forward to 2030, what loyalty and membership programs could look like? What are the bold bets or innovations you see shaping the next era of e-commerce and loyalty?

Jay Myers: I mean, I think 2030 loyalty will definitely not just be about earning points. It'll be about earning identity. Memberships will be literally like living, breathing ecosystems, fully powered by AI wrapped in community aligned with values that we talked about. The brands that will be winning, they're not gonna just be selling products.

They'll be selling belonging, status, purpose and powered by with AI and all of this. I think it's gonna be incredible experiences and relationships that, that we will have with brands. Subscription is a tool. Subscription is the foundation. It's a, it is foundation of the building. But I think there's gonna be so much more wrapped around it.

Truly like hyper-personalized AI driven memberships built on top of subscription that truly encompasses community, relationship, belonging, status, purpose, like all those values we talked about. I hope it looks like that because that would be great experiences.

Mark Chouek: before we talked about the new marketing skillset that this might require? I'm actually now thinking more broadly with everything you've said, that there might be a recognized. Skillset or character or persona of business person needed to make this stuff mainstream?

I so bear with me. 'cause this might sound a little bit, you can call it bullshit if it sounds a little bit too fluffy. But it's if you, now I now, and again, I see some marketing books or business books on the shelf here that my dad gave me, or from the local secondhand bookstore down the road. I want, I wanted to buy something the other day about if you read this, you know, everything there is to know about the music business and it's

Interested in and it's like, how to go from making music in your bedroom to getting up there.

But it was 2014. I'm like, nah, I can't, I it's two pound 50. I should get it anyway. No. 'cause it's gonna be out of date. Like more. That more has happened to that. Business model in the last 10 years than probably happened for half a century. So there's nothing in there that's gonna be of use.

So I'm thinking if you looked at marketing and business models from a book from 1985 or 1995 even, I fear that you are learning almost a different industry, whereas 2030 membership model retail requires emotional intelligence. It requires understanding of what costs to incur in order to build up costs for the future.

Jay Myers: Mm-hmm.

Mark Chouek: And it's about partnerships. It's got a very different understanding of brand and loyalty. Do you think there is a specific business skillset that we need to incorporate into our firms or already are for some businesses that is, that differs from kind of the sort of thing we see in. 1980s and nineties.

New York business films like, you know, all those tropes about huge silver towers and big lapels and barking orders in a bar boardroom are we talking about a different persona of successful business person?

Jay Myers: Yeah. I mean,

Mark Chouek: I like Does a buyer brainin, is that also a business brain?

Jay Myers: yeah, I think there's probably been some great books written in the past that like fundamentally the fundamentals are sound and true, but there's probably been some that are very much.

Mark Chouek: much

Jay Myers: Build a product, build a sales org. This is how you expand your sales org. Go out, sell close. It's the, it's all about the push push versus pull.

I think, you know, here's I had a conversation recently with two investors that they acquire e-commerce brands, and I asked them, what do you look, what are some of the most important things you look for in, in a retail brand when you're acquiring it? E-commerce brands? And they said the most, one of the most important metrics is the reorder rate.

They look at reorders per customer value of reorders, reorder frequency, and then they look at sorry drawing blank on the acronym NDR net dollar retention. So once you acquire a customer. Do they become more valuable over time? So what is the, so for example, let's say you acquire a hundred customers in a month and you lose 10, you have a 10% churn, but 10% of your customers also upgrade.

They spend more, they have an add-on product, they buy, so your net dollar retention actually goes up. So you might have, so a positive. So anything over a hundred is a positive number. If you have over a hundred, you have an extremely healthy business because it means you can acquire customers and you can take a dollar and turn that into a dollar 10 and a dollar 20 and a dollar 25.

And it, you have a business that can grow the value of a cohort of customers and then reorders. Isn't something like if I asked 10 brands, what's your reorder rate? And it's actually interesting because I'm doing this right now with a whole bunch of merchants of ours, and we're going through, because we're building products very specifically to drive reorders.

And I asked them what their reorder rate and not one has known, not a single one. In fact, I would say 95% of them didn't actually even know how to find the reorder rate. So I go in their analytics and I show them how to run the report to see what their reorder percentage is, how many reorders per customer, how many, what's their average reorder value, reorder frequency.

They don't even know how to report that. But yet it's one of the most important metrics that investors are looking at when they invest or acquire a business. It's the true sign of a healthy business is when a customer chooses to come back to you over and then when they do choose to come back to you, can you increase their value over time?

And I mean, yes, a hundred percent. It's, I mean, I tell you right now, it's not just in the future that we need this in our marketing teams, we need it right now. 'cause a lot of brands I talk to, they don't even know a, if I said, what's your net? What's your NDR? What's your net dollar retention?

They say, what's that? In fact, I was at a conference two years ago and I asked everyone at the beginning, there was about a hundred people in the crowd. And I said tell me what's your most important metric? And people would say, LTV, churn whatever. The cac, whatever, threw out all these numbers. Not one person said NDR net, net retention, some pe, net dollar retention.

And then I, so I asked, I said does anyone, how about net dollar retention? I said, does no one even knew what it was? And then it was one of those ones where I was doing a live podcast on stage. And so we talked about. Dollar retention a bit in the show. And I had someone come up to me after, and they said the show was like, it was like three or four days long, and they came up to me and said, that was the most important 30 minutes of this entire conference.

He goes, I had never thought about that. And we, I ended up seeing him again the next year and he came back to me and he actually, he saw me and he made a beeline right towards me, and he found me. And he said that has made the most impact on his business of anything he's ever picked up at a conference.

And it's not hard, it's not confusing, but we, people don't have resources and time and people dedicated to it. So yes, I do think we need, I don't know what the name of the people are for that role or department, but it is extremely important, not just in the future, like I think right now.

Mark Chouek: that's amazing by the way. You'll be happy to know that Orbital X runs on a, the most important single metric that we report every month and every year is NDR.

Jay Myers: Nice. Nice.

Mark Chouek: Yeah. Guys, we are good. That is everything I am. I have to go and get my kid from coding camp, but I feel like we've covered everything.

Jay, is there anything else you feel like you want to add that you feel like we didn't cover at all or enough?

Jay Myers: I think we covered a ton. This is, this was a lot of fun. I mean, I would say the most important thing right now is that everyone is thinking about membership at some level, and whether you have products that are recurring, whether it's, whatever it is, start thinking about what could membership look like.

For your brand, even if you're if you're not, what could a membership ecosystem be? What value stack can you, could you offer every, it's gonna look different for every brand. Some will be able to do live events, some will be able to do once a month Zoom calls with the founder. Some of them will be able to do partner perks.

Some of them will be able to do exclusive content. Some of them will be able to do access to online courses or communities. Some of them will be able to do early access to products. It's different for every brand. But start thinking about what could it look like? Whiteboard it and start thinking about what could a holistic membership program be for my brand, whether you have a one-time product or not.

Even if you have a one-time product, remember it can be earning credit every month. It could be VIP status, just a number of other things. And if you don't. I think you will really struggle in the years to come because a lot of the best brands are all investing and building out membership and it's very hard to fight from behind.

I think right now there's a opportunity to get ahead of it where people are only gonna sign up for one membership of one certain type of product, and it's gonna be very hard to do that in a couple years. But right now you've got this window of opportunity where you can get them locked in and start driving more and more value and growing it.

So I would just really encourage everyone to get ahead of it.

Mark Chouek: of it. Love it.