🏆 SHOPIFY 1% WINS: A $10 Gift Can Beat $70 in Ad Spend (Plus Almost All Loyalty Programs)

Good morning, one for centers. Welcome to another quick daily short here. Something I wanna talk about today is loyalty. Loyalty is. A very interesting word when it comes to e-commerce because some would actually argue that there is no such thing as true loyalty to a brand. Yes, some brands have very effective loyalty programs and sometimes customers do buy over and over from the same brand, but rarely is it.

Actually because of loyalty. So a good example of that is I was actually talking to someone last week who has bought Converse shoes, I think he said for 30 years. He's about 60 years old, and he's bought the same pair of Converse shoes for 30 years of his life. He's actually got six right now. All in different colors.

Red, [00:01:00] blue stripe, green stripe, you would think that this person is loyal to converse. So I asked him why he buys the shoes and he said they just fit well.That was it. There was no other reason. They just fit well. I said, well, would you switch to a different brand? And he said absolutely in a heartbeat.

If I found another brand that fit as well as converse this particular shoe, I would switch in a heartbeat. But I just haven't, I haven't found another pair of shoes that fits as well as these, and so I just, you know, I buy it and I stay with it. It's kind of like I buy that a certain black T-shirt that fits and you stick with it.

That's not actually loyalty. That's just. Convenience. You find something that works and you're trying to simplify your life and you just stay with it. And then also rewards programs. They cause an action. It's like you do a thing, you get a reward, but it's also not true loyalty. So [00:02:00] here's a good example to really illustrate this.

You know how these coffee shops have the buy 10, get a free coffee punch cards. If you buy 10 coffees, you go to a coffee shop and you get your free coffee, you earned that coffee. You don't feel loyal to the brand. Yes, that punch card might have affected your buying behavior. I'm not saying loyalty programs don't have an effect.

On, on buying behavior. What they don't have is they don't have an effect on true loyalty that you're not gonna go out to all your friends and rave about how amazing that coffee shop is. I bought 10, I punched all 10 cards and, and I got a free coffee. But let's imagine you go to that same coffee shop and they don't have a card program.

They've got no, no punch tent, but they keep track in the backend of how many coffees you bought. Maybe on their cash register they can see that, oh, Jay, this is Jay's seventh coffee. This is Jay's eighth coffee. 'cause maybe, I don't know. They, when I pay with my credit card, they just know who I am or something.

[00:03:00] And once I've bought 10 coffees, the barista says, Hey Jay, this one's on us today. I would be like, whoa, are you serious? Yeah, this one's on the house. Enjoy a coffee on us today. Like. That would blow my mind and I would probably tell people about it. I would probably say, wow, I am going to buy my coffee here forever.

Now, the difference in the effect that that has on behavior is incredible, versus I'm earning my points and getting a redemption versus just a gift Now. This is the thing, and here's why. Loyalty comes from someone doing something for you. You can't feel loyal to a stranger on the street.

They've never done anything for you. But if someone has sacrificed time for you, maybe literally sacrificed their body in some way, they've saved you, they've helped you, they've spent time with you, they've done something for you, you will feel [00:04:00] loyal to them. That's just how loyalty works. You can't feel loyal to a person walking down the street who's never done anything for you.

And so that same principle applies to other areas in life with, with brands, you can't truly feel loyal until someone has done something for you. And the problem is, is that's very hard to do as a brand. You can't just do everything for your customers. So then how do you get them to actually be loyal, to be like raving fans that they would.

Recommend you to everyone they know go out of their way to buy coffee from you and support you, not just if it's convenient because it's on the way to work, but actually like go out of their way. Now the only answer to this is you have to do something for them, and I would argue there's really two good approaches to this.

The first approach is maybe three, but the first one is. Think about [00:05:00] ways that you can surprise and delight your customers. Now, I'll give you an example of this. Um, so the coffee one is a great example. You know, instead of the 10 punch card Chewy, um, sells dog food subscriptions.

A lot of people subscribe to dog food and, what happens to everyone who has a dog while they eventually pass away? And what happens when their dog passes away? Well, usually they forget to cancel their dog food subscription and they get an extra bag of dog food the month after their dog passes away.

And it's hard to get it. It's painful. It brings up memories of the dog. But usually when people call the pet food company, they say, oh yeah, no problem. Send it back as long as it's unopened and we can refund it. What does Chewy do? They say, you know what, we'll refund you. Just keep it, give it to someone who has a dog, do anything you want with it.

And the person says, oh wow. Thank you so much. This is such a, a stress remover that I [00:06:00] don't have to ship this back right now. And then, you know what else they do? Because Chewy has that customer's address. They send them flowers. I mean, what does that cost? $30. So they send them flowers. Because their dog passed away.

And what does everyone do? Who has a pet who has a passes away? Well, within two years, I think the stat is like 80% of them buy another pet. So they're, where are they gonna go? They're probably going to be a chewy customer for life, not because of the loyalty program, not because of the points they earned on their pet food, but because of the flowers.

That got sent that complete gesture of kindness that wasn't expected. Okay, now, so here's the key. It needs to be not expected, and this is the difference between intrinsic and extrinsic motivation. So if you have intrinsic motivation is you do something because you want [00:07:00] to do it because you innately inside of you are motivated to do it.

Extrinsic motivation is you're doing something because of an outside. External force. So to your kids, clean your room and you'll get a cookie. You'll get a special treat. We'll take you out for dinner if you clean your room. That's extrinsic motivation, but inspiring your kid to have a clean room by.

Maybe they will go over to their friend's house. This actually happened to my kid. They go over to their friend's house and they see that their friend has a really clean room and it inspires them and they come home and they want to clean their room. Not because you're offering them reward, but because they're just intrinsically motivated.

Okay. So that's the difference between intrinsic and extrinsic. Now, how do you get your customers to be intrinsically motivated to shop with you? Not extrinsically, because of. Rewards and point systems and loyalty programs. Well, gifts and acts of [00:08:00] kindness are really probably the fastest way to get there.

There is other things you can do as a brand, like your alignment with charitable causes and maybe what you do in the world and different things, but like some type of act of kindness. And so you think about your customer's buying journey. I guarantee no matter what you sell, there's some point. That you could inject some gift or act of kindness that might be a month after they purchase or a week after they purchase.

Imagine this, imagine you're buying a, I dunno, coffee, I can use a coffee example for both of these, you bought a coffee maker. And you have like a schedule thing that goes out and let's say you sell beans as well too, so, so there's like a reason for your customers to come back there.

But one month after the coffee maker shipped, you have an automatic phone call that gets scheduled and maybe it's you, maybe it's an email, but you say, Hey, we noticed you bought this coffee maker a month ago. There is this [00:09:00] special. Add-on for milk frothing, that, that just came out and, I noticed you didn't buy it.

I'd like to send it to you for free. No questions asked. The customer would be blown away. What do you mean for free? Well, we just noticed that you bought this coffee maker and there's this new addition and we just wanted you to have a great coffee experience. That customer would be blown away. I don't know what it, what, maybe it cost 20 bucks, but that customer would be blown away and you would have.

A customer for life. And then now think about that as a marketing expense. Okay? This is the problem is most people think, oh, I can't give things away. It grinds away at my profit, my cost of good sold. But put it on your marketing line item, not your cost of good sold line. Okay, so here's another great example.

Imagine you have a subscription and you've got people subscribed to coffee. What if. Yeah, every once someone had been subscribed for three months or six months, some period of time, you sent them an [00:10:00] extra bag of coffee. Yeah, and you put a little handwritten note in it, and you can use tools like handwritten or different ones to actually hand write these notes out with a pen.

So it looks like you're handwriting and it actually is handwritten. It's not a printed but depending on how many subscribers have, you could hand write them yourself. But the note would say something along the lines of like, we hope you're in, we hope you're loving your coffee subscription. I wanted to include an extra bag, 100% for free.

Our hope is that you give it to a friend in your life that also loves coffee. We're trying as so we can spread our passion for good, good roasted beans, something like that. And so now that customer, that subscriber is going to find someone. Who also loves coffee, give them a bag of coffee. And now maybe in that bag of coffee is another postcard of some sort with welcoming, telling them about the coffee, telling 'em about how the beans are grown, how they're roasted, the special treatment you [00:11:00] do to them to get the special flavor and there's a QR code to scan and get a, get your first month free with a of a coffee subscription.

That would be huge. Now, A, that first customer, that first existing subscriber is gonna feel very grateful. They're gonna feel gratitude that that was just a surprise. And you know what? Even if they keep that bag of coffee and they don't give it to a friend, maybe they don't have a friend in their life, that's also not the end of the world either.

That's a very nice gift that would probably keep them engaged at, you know, five to six months. For a lot of subscription brands is where churn starts to happen. So sending a gift out at that point is. Maybe a potential churn, churn reducer. So, but what is that coffee customer gonna do? He's gonna find someone else who loves coffee.

Okay. They're gonna find the ideal customer profile for you. They're not gonna just give it to someone who doesn't drink coffee. They're gonna give it to their friend who loves coffee. Okay? So you're actually getting [00:12:00] a, super quality potential customer versus if you spend money on Instagram. You're gonna get traffic, but the quality of that traffic in those customers, who knows what it is, they might not drink coffee, they might just, they be be trying to quit coffee and they wanna buy one more bag.

Who, but they're not gonna be the perfect customer. But a friend giving a bag of coffee to someone who loves coffee is almost 100% of the time going to be a perfect customer. That you just now potentially will acquire for? What does it cost? What is a bag of coffee at? And just say it's $10.

People are willing to spend 60, 70, $80 customer acquisition cost on Instagram, but they don't wanna give away a $10 bag of coffee to acquire a customer. And what do you think the conversion is gonna be on that QR code where it says, if you love this, try a subscription. Never run out first month's on us, it's gonna be high.

I'll tell you that right now. [00:13:00] So you're getting an ideal customer profile, your ICP also with the best form of an influencer. Now, influencer marketing we know works people on, you follow on social media. You see what they buy, you buy it. Do you know what the number one type, the number one best influencer is?

It's your best friend. There is no better conversion. Then your best friend recommending something to you like, oh, the skin lotion has been amazing. Oh, Ben, you should try this coffee. Oh, I'm doing, I'm trying this sleep vitamins or something. There's no better recommendation than a personal friend.

So now you've got the highest value influencer giving a product to the most perfect ICP ideal customer profile. Who loves your, who are, who, you know, loves that product or has a need for it. Maybe it's like skincare and they get a, another bottle and they give to someone, like they've got a need for some skincare.

Okay, so like, [00:14:00] this is just a bit of a, I guess, a bit of a hack here. Maybe I'm kind of going on a tangent, so oh, wrap this up. But you're doing two things with this. You're creating a loyal customer and you're potentially getting a new customer. So it's a win-win. But even if you don't have subscriptions and you just sell products one time, I would experiment with some type of a gift or an offer that goes out.

In some kind of an automated way. Like every time someone, you can run a report for all the orders of a certain product last month and then automate some kind of reach out to send them a gift, do something. That is how you get true loyalty. Do something for your customers. I saw someone post the other day on LinkedIn.

They were flying JetBlue and they sat down on their seat and there was a handwritten. Birthday card in the little flap in front of you or the, the pocket, and it said Happy birthday. What did it say? Something about being a mile high jet? Shoot, I can't remember. They, they had, there was a [00:15:00] catchy kind of like pun on it.

But anyways, it said something like, from all of us at JetBlue and they and they signed it, the flight attendant signed it. And they posted it on social media and this person wasn't sitting in first class. They were backed by the bathroom. And and they still, the flight attendants left a handwritten card.

And I don't know how long that takes. What do you think on the average flight, there's maybe one person that has a birthday, maybe two. It doesn't happen that often. They have the birth day information of all the passengers. That's a very easy thing to do. And it totally made that person's day. They posted about it.

They will probably feel a bit more loyal towards JetBlue in the future, and when they're booking flights, they might lean towards booking with them because let's face it, often, I don't know about you, but I earn points with all the airlines. I choose the airlines, not because of the points programs, but because of how I'm treated, how they treat me, what they do for me.

One time a flight attendant gave me an extra pillow. Because they, well, why? Just because they, I dunno. I was sleeping and I guess my head was [00:16:00] on the side and they said, would you like an extra pillow? I'm, I'm only supposed to give one. But we have lots little things like that. So think about your bo your customer's buying journey.

Where can you inject some acts of kindness? Um, some gifts. Oh, the last thing I wanna say on this is often the number one time for this is when something goes wrong. Okay? So. Usually if someone just buys something, you go to a store, a coffee shop. Actually, this happened to me. I'm gonna use a real example.

If I just go to a coffee shop, I order my coffee and my sandwich, and I get it and I eat it and it's good. I don't rave about it on the internet. I just, that's what I expected. Right? One time I went to a coffee shop, we went through a drive through, uh, we got our coffees and we got sandwiches for the kids.

Um, it was actually my sister-in-law and. It was all like in a bag. We didn't open up the bag and we got home, opened it up and it was [00:17:00] missing two sandwiches and one of them was wrong. I think they gave us someone else's order. I don't even know, but it was all messed up. But we were at home and it was like 20 minutes away from the coffee shop, and so she posted on Twitter, like the coffee shop was Tim Horton's up here in Canada.

Thanks. At Tim Horton's, you couldn't even get a sandwich order. Right? Now I have to drive back out to get dinner for the kids. Something along those lines. Well, what Tim Horton's did is they didn't just reply to the tweet and say, oh, I'm so sorry. It is our sincere apologies that, that this happens with, oh my gosh, those types of replies I just hate.

But you know what they did? They dm’d her. And they said, we would love to drive the correct order to your house. If you'll send us your address, we'll have someone drive it over right away. And she was floored and she gave 'em the address and one of the employees drove it to their house. And I've personally told this story [00:18:00] probably a hundred times.

I might have even told it on this podcast before. She's probably told even more people and. Like that's an example of when something goes wrong, it's an opportunity. Every single time a customer is mad at you sends an angry email in or something. That is a perfect opportunity, and I know it's attempting to wanna lash back when someone emails in all caps and they're furious and they're, it has been six days.

Where the heck is my order? Can't you get anything? Right? Is it that hard to put a product in the box and ship it out? It said four days delivery on your website and it's down. Day six. Explain yourself. I did my son's birthday. We missed, I. Expect better, like it's so easy to reply in an angry tone saying this is not our fault.

UPS has it and I'm sorry, we're not the delivery man. We shipped it. This is out of our hands. Here's UPS's phone number. Or you could take ownership and you could say, I am so sorry about this. I'm gonna tell you what I'm gonna [00:19:00] overnight one out right now. You keep that other one. When it comes, you give it away to someone else.

Or, oh, I'm so sorry we missed your son's birthday. Is there anything we can do? Here's a gift card for Nintendo online for him to download a game on us, a $20 gift card. I don't know, games can be 15, 20 bucks, but whatever. That customer, because the same type of customer that has strong emotions, but they say there's like people who hate hard, love hard.

It's just those people who have strong emotions have them in both directions. And so often just when someone's angry, we think, oh, this is just an angry person. But they're actually not. They're just a strong emotion person. That same person can love your brand more than any other brand in the world, and that same person can hate your brand more than any other brand in the world.

The people that are just indifferent and never email and aren't emotional about a brand. They probably, even if you do [00:20:00] something super amazing for them, they might not go outta their way, but that person that does get angry, they probably will go out of their way and brag about you and be loyal for life.

So don't discount angry customers. I'm telling you, I've seen it so many times. Um, it's hard. But man, do they turn into great customers when you make something right? I'm sure you can think of times in your life too where something has gone wrong and that brand did something to make it right and went out of their way, and you became a loyal customer for life.

So that's it for today. Find ways that you can do good. Give acts of kindness, something for your customers to create true loyalty. Go ahead, have loyalty points programs. I don't care, but I'm just telling you that doesn't create true loyalty. That might reward them for their actions that they're taking, but it doesn't create true loyalty.

Find ways that you can do something. Give something [00:21:00] some act of kindness for your customers and that will create true loyalty. Okay, that's it for today. Thank you so much for listening. This was a little bit longer than normal, but I'm very passionate about this one. So thanks for staying here till the end.

See you on the next one.