Podcast Transcript
Y: Yaw
E: Eric
E: I wouldn't say it's more of a focus it's really just a balance between the two of acquisition and retention. Like there are things that you can do on either side that will influence the other.
Y: Welcome to Touchpoints! A show where we celebrate the stories of Direct to Consumer leaders, marketers, and operators that are creating breakout brands in the digital era.
I’m Yaw Aning. I’m the co-founder & CEO of Malomo, a shipment tracking platform that believes in helping brands drive deeper relationships with customers.
In e-commerce, it’s becoming increasingly important to not just acquire customers, but retain them. With paid advertising skyrocketing, the brands that experience breakout success are those that can quickly turn one-time buyers into repeat purchasers.
In fact, according to RJ Metrics, the top performing ecommerce brands go from 20% repeat buyers in year 1 to 60% by year three.
The question is, how do you do that? What changes need to happen in your business to get customers coming back to your store to buy again and again?
When thinking about driving retention, email marketing is viewed as the holy grail in getting customers back to your site buying more. And while that’s true for most brands, there are many more things you can do to drive repeat purchases to scale your business.
Today we get an inside look at how Ollie - a subscription based dtc brand that sells freshly cooked and customized dog food - achieves this. Despite being a subscription model where it may seem like repeat purchases would come automatically, Ollie must employ a set of tactics and strategies to ensure customers aren’t cancelling their subscription. These tactics and strategies can be used to drive retention at any dtc brand.
Today we hear from, Eric Chung, Ollie’s Director of Retention. Eric oversees the entire customer experience, with the goal of ensuring customers continue their subscription with Ollie over time.
Through his experience, Eric has gained a specific set of skills to not just analyze customer behavior and how it’s affecting retention, but also how to turn that analysis into actionable solutions. This role is a marketing role, but as Eric explains, he has to work with and influence every single touchpoint a customer has with Ollie, from how the customer first hears about the brand to their tenth shipment of Ollie goods and on.
Eric kicks off the episode describing the things that fall under his purview as director of retention.
E: Yes really under retention the things that fall under it have to do with anything that keep the customer as a subscriber after they sign up. So that's anywhere from the actual customer insights and understanding what the experience is like, to the engagement with the customer and around marketing and education around the plans. But then also the physical product experience so how the food is delivered, how it arrives, how you unbox it in storage in, ow you feed it anything that touches that part of the experience like today because our customers are using our products two times a day. The physical properties are really important how they serve it how the food looks all things like that and then the digital experience is well since we're a subscription business there's a lot of adapting and flexibility that people want to have other plans. So if you think about dog food we’re a subscription food product but it's not like a blue apron or plated where...you're sort of relying on Ollie every single day to feed your dog. So it has have to arrive on time but if you're on holiday or anything like that you wanting to be able to ship your box get it earlier, get it later or send it to a different address so that digital component is also really important for you to be able to switch out your plan whenever you want...or if you want to change to recipes your dog is changing so you want the plan to reflect that as well so it really goes across the physical experience, the digital experience, the insights that come out of that how we service people from a customer experience standpoint.
So I chose Ollie really for the stage of the company and then the mission of the company and what we're doing here. I was always into the Innovation world and about changing consumer behavior, changing industries that were really big and doing something really new and it felt like that's what Ollie was doing. Ollie has a mission of putting healthy dog food in every dog bowl. So to be able to change an entire industry where it's a big trend where people are sort of treating their dogs like a member of their family - they want to feed them well and the industry doesn't really do that. In order to do that we're changing so many things about how you feed your dogs and what you need to do. So there's a lot of education in that, a lot of things you have to bring the customer along in & to me that creates a really interesting role especially in retention. So ya had to do with being able to change an industry, work at a stage of the company where we're doing something really exciting and growing and then also that ability to continue to work across a lot of different functions within a role where in retention you have to think about marketing, you have to think about the customer insights you have to think about the physical experience, that digital experience that everyone is going through so all of those things really attracted me to the role.
E: when I think about some of my past experiences and what helps me with my role of Ollie today I look back at two things. It's really understanding consumers and working across different functions. So launching different products and businesses and thinking through what's right for consumers, you really have to be comfortable with insights and that design process so all different types of research that is possible and the right questions to ask in the right way to ask them to really dig deep and figure out what our customer needs and how to think about customer experience the right way not just from a support standpoint but really thinking through their journey as a customer and what are the moments that you're solving for how should they feel, all those different moments and then once you have those insights really being able to come to create the product or experience that is right for them. So working across different teams whether that's technology, operations, marketing like making sure all those teams are working together towards the same goal and then working through all the trade-off that always happens. Because you can define exactly what's right for the consumer but when you get to actual implementation, there are always trade-offs that you have to make whether there's a supplier that didn't work out or it's going to cost too much to do a type of experience or one experience would cause you to have a worse experience somewhere else. You have to think through those decisions so I think in my past experiences and roles like doing all of that and having a lot of reps through different products and businesses doing that definitely helps today at Ollie.
Y: To set the foundation, Eric walked through what the experience is like as a new Ollie customer. With all of the changes he seeks to implement, he first labors over the details of the current experience and all of the touchpoints that roll up into that experience.
E: Yeah so customers after they find out about Ollie they go through our website to sign up and it starts off by us getting to know your dog so we can personalize your meals for them. So we understand their breed, their age, whether they’re spayed or neutered, how much they weigh, how much their ideal weight should be, or how much you want them to weigh, their body composition as well as what they're currently eating. So from there it helps us understand things like how many calories your dog needs to be healthy. And then you go into choosing a recipe choosing how much you want to feed your dog. So how much Ollie you want to feed your dog. So pretty flexible in that you could feed your dog entirely 100% real natural human grade dog food from Ollie...or you could decide to start mixing it in to your regular food so you can get a 50% plan we're using half of Ollie's food and then half of another food or you could sort of sprinkle Ollie on top to make your current food more appealing and get some of the health benefits to them. So we have different types of meal plans that people can ease into changing the way they feed their dog. And then from there after you make your selection, you get your first trial box which is two weeks worth of food. So that will include the food itself but also we have a scoop that helps you serve the food out a container that allows you to store the food in your fridge and keep it separate from the rest of your food in your fridge so from there people go into subscription experience with us.
In terms of the plans we tell you exactly how many calories your dog needs and then we size the meals exactly for that. In terms of choosing the recipes like beef is our most popular recipe so we definitely tell people that. You get a choice out of beef chicken lamb or turkey and then later on as a customer if we do some education on if your dog is loving beef then they'll probably love like this other recipe as well. And then from there it's really about how much percent of the plan you want to feed your dog at that moment. So like the 100% plan you get the best value out of it because you're ordering more food but you're also paying more so some people might ease into that so they might start at a lower percentage plan.
Y: Eric is successful at what he does based on his ability to see trends in customer behavior and adapt the experience to meet those needs. He’s gotta have an understanding of not just how to analyze the data customers are sending your way, but also to actively conduct research to figure out how he can provide a better experience without the customer explicitly telling him what that experience should be.
So I’m actually a customer of Ollie and I shared with Eric an experience I had recently.
(Yaw story about going to New York and needing to change shipping date and address)
E: Yeah and that's an example where like something like that that happens like your wife forgot that's a part of the experience that I would want to improve. So we just launched like a shipping soon email where you now know right before your box is coming so you have the opportunity to change your recipe that's included in or move that box early or move that later or you can change the address to deliver to on time so that you're not forgetting that it's coming already and it just really leads to a better overall experience and those are the things that retention is really about.
Y: Figuring out how early or late to time that type of notification is an important part of delivering a happy customer experience.
E: Yeah so it comes with when do we think it's enough time for someone to change it. So if I let you through email just thinking through the actual putting yourself in the customer's shoes in thinking through if I had a box coming like how much time would I need to get that done that in order to remember to log in to my account and make a change before it comes. So just from being more empathetic about it talking to customers about it. So we've learned anywhere from 1 to 3 days that's how much time you would want depending on how often you were saving the box. So when someone gets an alert like they typically have three days to go and make a change before it gets packed and shipped out to them. So yeah has to do with knowing how long they have between boxes and how likely they are to forget about it and how much time and they're busy busy lives they need to go and make those changes if they need to.
A lot of uncovering insights from that start with the fact that we’re a direct-to-consumer company. We have direct relationships with all of our customers where they're reaching out to our customer experience team or I'll have conversations with some of them are most engage customers pretty often so things might bubble up where things are saying “well I forgot to make changes to my box, can I change them now?” but it was already shipped out like the more we hear that the more we start gathering data on it and we start realizing that this is a big problem that should be prioritized because we'll have a much better improvement on the experience if you fix it. We're hearing this a lot directly from our customers so that'll help identify the problem and then depending on how much work is included on fixing that that might warrant like doing some more investigation around it. So I might go and interview some more customers to see like what's the context behind that is that really a problem or is there something else driving it and if what we are doing prove that what's the best way to improve that? Then that would lead down to “what are potential solutions and we could A/B test a solution as well so for something like this email like that might be something that we test with a smaller audience at first to see does that actually drive and make those changes and are they getting a better experience out of that and if that's the case then we launched with everyone. So since we're a direct-to-consumer we get to hear the problems that bubble up and then we can like easily and quickly test and see what's working and change it up if needed and then put it in place.
Y: As Eric collects feedback from customers, he has to decipher which are the most important to tackle that will move the retention needle.
E: Yeah so in retention the way I prioritize like what I did all the things we need to fix I look at drop-off and churn. So basically if you look at the entire life cycle of different customers you can break that down and we're always gathering data on why people might be canceling, why they might be pausing their boxes and use that data to really understand, “Okay someone who only has been a customer for two weeks versus a customer that's been around for a month for 3 months or 6 months like what are the biggest reasons why they might be canceling?” and that helps me prioritize if I fix this one thing I'm going to have a much bigger impact on what are retention looks like. So I use that to prioritize the specific area that we might work on and then that's all data driven. But then from there you need context of like I've identified the problem but what's actually wrong with it and what do I need to solve? That's where talking to customers, doing surveys, to get that context around what's the pain point you're trying to solve for really comes in and once you have that you might need more research to understand how people are reacting to that solution that you came up with. So you might do like in-home research to understand that, you might have conversations with them over the phone or bring them in for a focus group or one-on-one conversation to see if that's all is actually working. And then you might pilot it with a smaller group which is another data point that you do. So each of those stages and types of research and learning that we're getting it's almost it's almost like you're getting a higher level of confidence that is going to work in sort of getting more information in each stage.
Y: To elicit unbiased, Eric has to position his questions in specific ways.
Yeah I think an example could be it's less about asking people directly what they want and - I think a lot of people say this especially in the innovation world - we think of Clayton Christensen like he always talks about jobs-to-be-done where you're digging through what's the actual thing this person is trying to solve for vs asking them if they need it or not. it sort of applies the same when you think about dog food and humans versus the dog. it's not about asking them what they're looking for, but more - let's say we're taking food and what the food looks like for example. If I want to understand how the food should look when it arrives to a customer, I'm not directly asking them to describe it to me. It's more breaking down those components of, “Do you want to see more ingredients or what's the right type of texture you want to see?” Its understanding like, “how do you know the dog likes the food?” and then they might say it's based off their reaction or the way that he or things like that. And then from there so your digging through how they get there like what are they can use that drive in to think that way and then using those insights to then determine, like what we create so it's less directly asking people what they want but more understanding what drives that.
Yeah it's like trying to get at what other actual needs or pain points based on what they're saying. So not really taking the solution right away at face value but really understanding why customer might be suggesting a solution and what drove them there and then maybe sometimes the solution that they're offering is right but maybe that the reason they came up with a solution was caused by something else in the experience and you want to get to the actual need of it why they feel that way so that you can solve that versus just creating a lot of solutions were you really don't understand what's driving it.
E: Ollie has a unique challenge - they must market the product to the human, but the consumer of the end product is the dog. For Eric and his team, they have to think about the needs and wants of both audiences, even though one audience can verbalize those needs.
E: Yeah so we have to think about the human and the dog pretty differently when it comes to creating like products or marketing towards them. So if you think about the food for example, the human might see the food one way but it might taste completely different for a dog. So what works for the palatability for the food for the dog versus how the food might look to the human it might be huge trade-offs. So the way we handle that is you really have to test both audiences so you can test food with dogs like literally do taste tests with dogs and see does one recipe work better than the other? Are we doing a lot better than alternates out there? So we look at that a lot but then you also want to talk to customers and see like how are they reacting to the food so there's always that balance & middle-ground of like the food has to look good for the human to want to buy it and feed it to the dog but then the dog has to react to certain way so that the owner then feels like they they like it and they want to keep buying it for the dog. So there's always thinking about both those audiences and they're usually not on the same page. Or could not be on the same page.
Y: And the insights themselves they're coming from the human- so all the insights are really being filtered through that human lens ….
E: Yeah there are types of research way are you could see the feedback from the dog. LIke if you're putting two bowls of food in front of a dog and they are way more excited to eat one versus the other, you can see that. But when it comes to talking with your customers & when they're saying that their dog likes the food I really loves it or doesn't like it it's really how the owners are interpreting it and sometimes you have to trust that they know what their dog likes. But yeah it could be maybe they need to warm the food or something or fluff it up or mix in some other food with it. Tthat'll change things up a little for the dog. There could be a lot of things that drive the dog to react to certain way that the human doesn't always know.
Y: Eric joined Ollie as its first director of retention. At the time, there were a couple things happening inside the business that caused Ollie leadership to realize, “we really need someone leading this charge.”
E: So what's happening inside the company that I think led to we need someone to own retention that has to do with the stage of the business and with any business, at the beginning, you're trying to get people in and you're trying to see what works. Like are people even interested in this product? Can we get them to put money towards it and pay for it? Can we get them as customers? but with any subscription business like the way you can drive that model and get a lot of growth is the people that are paying to come in you're actually keeping and retaining them. So I think it's realizing that if we can improve the experience and create a better product for people to understand what keeps people as customers and what drives people to leave and we can improve the product based on that, we’re growing a lot faster. Like everyone we're bringing in is more likely to stay, we don't have to go and spend a lot of money to recruit more customers and acquire the. So yeah I think it had to do with the stage of the business and realizing like how important retaining a customer after you bring them in as a specially for a subscription product.
Y: At a certain point, does retention become more of a focus for a company than acquisition?
E: Yeah I wouldn't say it's more of a focus it's really just a balance between the two of acquisition and retention. Like there are things that you can do on either side that will influence the other. So if you're going after much higher quality leads like that's going to lead to higher retention but on the front end that's probably a smaller pool of customers that you're going after. So at the end of the day, the net result might be lower. So there's always balances on either side where you might have an initiative on the acquisition side that pulls in a lot more subscribers but let's say at a really high discount or something like that might pull in a lot of people at the beginning but they might not retain well over time. Or you might do something on retention that would actually help acquisition as well. So if we're going through an effort of launching a new product for existing customers that we keep around longer that might attract different customers in the acquisition side. So I think it's really a balance between the two and being able to work together on the acquisition and retention like it becoming a more focused later on.
Retention does sit under marketing in our company but it does stretch across a lot of different organizations. So the reason I think retention is sort of its own department is that it really touches everything. So when you need to change the experience to retain customers better, that could be on the tech side, on the operation side, on the customer experience side, it could be the physical product. I think there are so many different parts of the business that influence retention that is hard to keep it in one bucket. So it really is a cross-functional role where I'll work with different people on the team on all different initiatives all the time. So having like one team or one person have a handle on all of that and is able to prioritize like what are the projects that impact us the most and then who do we need to bring together to get this initiative going...that's sort of why it needs its own function in my mind.
Y: Consumer insights are the driving force behind a dtc brand. The better you understand your customers, the more you can give them what they need and want. Once you have those insights you must quickly turn them into action to solve customer’s problems. Eric has mentioned that retention is not silo’d, it actually impacts every other part of the business. So when he wants to implement a new retention strategy or tactic, he has to get multiple departments in agreement, working together.
One recent example of this was a packaging redesign project that required significant involvement from multiple teams within Ollie.
I noticed Ollie changed their packaging quite a bit when I received my last few boxes. So I asked Eric how the new packaging came to be and why they changed it up.
E: Sure the new packaging projects we worked on it's a lot more than just packaging, It's really we redid our whole experience on how people use our products and what they get. So what we did was really think about customer insights that were coming in and what the feedback was with our current experience with our current packaging and trying to improve all things throughout the journey. So how something holds up during delivery, how much space efficiency you have when you're storing our food, and then how easy it is to serve. We like a personal touch that we have in the playful tone that we have with our customers so really thinking through that was the challenge and what we did was watch new packaging that was it just the physical thing that the food was stored in but we change the way that you're storing it the way that you portion of food to make it a lot easier. We changed a number of skus that we have so that we can be more accurate around like what you're feeding your dog as well as how you serve it & portion it out so all of those things were a part of the change.
The consumer insights that led to the new packaging a lot of that came from being a direct-to-consumer business as I was saying before where we have a direct relationship with our customers. We're always collecting feedback on how someone's delivery went so they can tell us issues on the package what are reaching out to the customer experience team to let us know if they have a problem or what they don't like. So we were hearing a lot about how in transit, our old packaging instead of our new packaging is more vacuum sealed before that it was in plastic trays that had a seal on top so what was happening on delivery sometimes when you're delivering frozen food with a nice packaging...things can get cracked in delivery. So some customers would receive cracked trays and that might lead to problems down the road. Like it's more wasteful...we might have to throw out the food the packaging itself felt bulkier and more wasteful and we heard that through from customers through the delivery experience feedback as well as people contacting our customer experience and canine care team so that was one thing. Then customers would call in a lot to ask how to portion out or serve the food. So before we had a scoop but you would use to measure out how much food to feed your dog that scoop was personalized for what your dog needs but we realized that people might fill that scoop in different ways. So if you picture measuring a cup of brown sugar like you could pack a really tight in that spoon or you could loosely pack it so that same spoon can measure out different amounts of food and that didn't drive and ideal experience so those were the problems that came out from talking to our customers and checking the data that came in from our customer experience team as well as why people were canceling.
We knew there were problems that were worth fixing on the consumer side and generally people were on the same page that it needed to be fixed. I think how to solve it was a lot of cross-functional effort. So even though it was problems for the consumer in fixing those would improve the customer experience, I think what helped a lot was there were benefits and cost on a lot of different parts of the business because we weren't just changing the packaging, we were changing the whole thing and not only lead to better experience for customers but it also helped drive different business metrics because we also had the opportunity to rethink how many skus we had, how often we shipped the product, what types of material we are using like all things like that so I helped drive other benefits for the business as well. But then it also had to include a lot of different teams so on the tech side we had to think about how do you map customers to these different plans that drive the new experience, how do you source the new materials for the packaging, and on the operation side, how does this change like the whole supply chain on how that food is packed and how the facilities packed boxes. From a design standpoint like what this new packaging look like? What is the education that has to go around it on the marketing side, like how do we teach people about this new experience so all of those teams would have had to work together and we had to make trade-offs between all of our teams on what kind of change would help operations a lot versus what type of change would help the customers experience a lot and sort of finding the right times to make trade-offs on those balances.
Y: When bringing the team together to figure out whether to invest in new packaging or some other part of the experience, Ollie had the right data to know this was an initiative worth solving. The teams had to then decide how best to solve them.
E: I think generally we were on the same page of this being an important problem to solve today because we had the data that showed how many people were saying these were issues and we had the data to show people were canceling for several number of reasons and if we improve those we can get a higher lift on a retention or LTV...and like I said it also helps improve other parts of the business. So I think more of the conversation was around the actual solutions that actually came out so what's the right packaging to go with and as we think about the new experiences like what types of decisions did we want to make on things like” how many trays of food are included in your box” or how heavy should that box weigh like those types of specific questions are where we had more conversation around.
Y: With this project being consumer facing, I was curious how something like this rolls out and is tested with customers.
E: So they were phases with testing so what our team did was going to do a lot of in-home research to understand what were the experiences that people have today with the product and where can that be improved and then tested things like concepts are prototypes within. So without having a launch new packaging, we could test how customers my react to prototypes or drawings of new packaging and then from there they learned a bunch of things about what may work what might not work and then when we were actually ready to .aunch we had a group of customers that are more engage customers. So I was able to test that with them and send them a few boxes to try the packaging before we launched with everyone else. So there were some quick things that we learned it wasn't anything that stopped us from launching but they were like improvements that we knew we can make and things that we knew we should keep an eye out on and make sure that we track with all of our customers moving forward before we launched. So having that really engaged group that we could send things to before we send everyone and get that feedback on was pretty helpful.
Y: How do you measure the success of something like packaging?
E: Yea so there's a lot of measurement going on. We are tracking new packaging feedback right away with customers like after they receive the box. They enter survey that goes through all of the things we wanted to improve on and asking them if they've actually noticed a difference in that and if not why, what are the things that they have problems with the new packaging because a lot of times when you change something, you might fix 10 things but 3 other things might go wrong. So we're keeping track of that. On the retention side we're making sure that we're retaining people better than we were before. Just from a more larger-scale like data standpoint, like we can know if this is actually making an impact and then we continue to talk to people in one-on-one conversations on “what are the problems they are experiencing but the new packaging what are they like better or worse things like that?”
Y: It would seem as though after a customer subscribes its a pretty straightforward process. Package is delivered to the door, customer uses product, the whole thing just continues on autopilot. But Eric describes otherwise.
E: If your subscription that everyone is using all the time you have to work with their life and when the dog changes and you need to update their way or how much food they should be eating like that requires going on to the website. If you're going on holiday or you going to move that requires you going to the website. If you forgot to serve the food and you need to push the box back you have to go on it. If you but say for example there's some customers who split their dogs between two houses, they might have food in one place and they might have food in the other and then might run out so they might need to move a box early so there's a lot of things that the digital experience helps make the subscription better. So it's really both that people are involved and even after they become a customer.
Y: I’m Yaw Aning, thanks for listening.
I really hope you enjoyed listening to this episode as we enjoyed creating it!
Huge thanks to Eric for sharing his story. You can find out more about Ollie at MyOllie.com
The Touchpoints series is brought to you by Malomo. A shipment tracking platform that lets retailers create magical moments that drive engagement with customers after they buy.
To learn more about Malomo, go to www.gomalomo.com.
To listen to other episodes in this series, search for other Touchpoints Podcasts on your favorite podcasting app, or visit www.gomalomo.com.
The music was created by the amazing James Kennedy.
