Claus Lauter: Welcome to the eCommerce Coffee Break podcast. In today's episode, we discuss how to leverage subscriptions and loyalty together to increase repeat purchases. Joining me on the show is founder and CEO of Smartrr.Com, Gabriella Tegen. So let's dive right into it. A
Voice Over: top rated Shopify growth podcast dedicated to Shopify merchants.
And business owners looking to grow their online stores. Learn how to survive in the fast changing e-commerce world with your host Claus Lauter, and get marketing advice you can't find on Google. Welcome. Welcome to the show.
Claus Lauter: Hello and welcome to another e-Commerce Coffee Break podcast. Today we want to talk about how you can leverage subscriptions and loyality together to increase repeat purchases.
We have talked about subscription and loyalty in the past. But how can you merge these two together to get a bit of a better effect out of it? Joining me on the show today is Gabriella Tegen. She's the founder and CEO of Smartrr.Com. She is back on the show. She has been here before and under Gabriella's visionary leadership as, um, smarter has landed her over 17 million in raised capital.
A nomination for the Forbes of 30 under 30 and cemented her status as a rising star in the tech world. Just three years in, Gabriela has used her unique perspective on e commerce to grow smarter to 30 employees strong, service hundreds of high growth brands and establish itself as a leader subscription on a loyalty platform in the Shopify ecosphere.
Beyond her role in Sparta, Gabriella is also a respected voice in the entrepreneurial community, having Authored articles for prestigious communities like Entrepreneur, Forbes, Business Insider. So let's welcome her to the show. Hi Gabriella, how are you today?
Gabriella Tegen: And thank you so much for having us back. Great
Claus Lauter: to have you back.
Last time we talked about subscriptions. Um, Smarter is working, doing more now. Loyalty came on board and it sounds like a perfect pairing. Tell me a bit about the power of combining subscriptions and loyalty together.
Gabriella Tegen: Yeah. Great question. Great. Great. Want to kick us off. So essentially we saw two main things in the two years that we had been working on Smarter.
One was brands continue to struggle with accessibility to subscriptions and repeat purchases. And while there were more apps than ever, it became more cumbersome to install and get live with the apps than ever, which led to high costs. And obviously 2024 and 2023 brought us a time where brands were looking to save money more than ever.
So we wanted to do a couple of things. We wanted to consolidate tech stack. We heard a lot about brands frustrated with. Just managing too many relationships with tech providers, and while there are some really essential tech providers we believe need to be their own platforms, we thought that loyalty compliments of our platform really nicely.
And ultimately, what we want to do is make it easy for businesses to launch subscriptions, manage them and drive more of that repeat business. We. We're not prejudiced. So we're, we're good with any kind of recurring business. And in fact, what we saw is those repeat recurring buyers are the most likely to become subscribers.
So totally you're on point. Uh, it was a very natural evolution for us and it has been great for our brands.
Claus Lauter: Mm hmm. You're quite right. I mean, there's about 10, 000 apps in the app store right now, so it's, it's, it's massive. And it's always and always was the case to have as little apps as possible in your store just to keep it manageable.
Now, you told me before that you were digging into data and you found out that people come first to loyalty and then dive into subscriptions. From your experience, what kind of products work best for offering this kind of combination?
Gabriella Tegen: Great question. So twofold subscriber only models work really well with consumable products.
We see among the highest in terms of revenue generated and LTV would be supplements, pet products, baby products. So, things, things that you're willing to spend money on, right? Your children, your pets, your other children and yourself, your health. So 3 that with, even without a loyalty program, we see consistently performing without a doubt.
Now, there are slightly more challenging verticals. I will say, no matter how wonderful your product is selling beverages online, selling food products online, um, that comes with a number of challenges. The number 1 being competition. There is an option set for consumers today where there are many products that they can be trying, many of which are delicious and amazing.
Just focusing on food for this example, food and beverage for this example. What we found is that loyalty amplifies the ability to keep that customer going back to your product. It's not shelf space. Excuse me. That's in their face when they go to the grocery store, and they see your product every day.
It's the choice that either they are subscribing and. Maybe not thinking about the product and having it just deliver and consuming it. That's great. But maybe they are thinking about it. They're not subscribing and they actually have to go back to your website. So we wanted to make it as easy for them and as, uh, engaging for them, which has always been our premise, but also as rewarding for them, we want to thank those people for coming back.
And that's where the loyalty component comes in. And then the last category is apparel. Is higher end exclusive clubs, um, maybe the ones that you less typically think about as online subscription experiences that more membership focused, um, long tail customer and that's a lot of where we see loyalty becoming.
Increasingly important for the brands on smarter, um, making sure that there is a unique element that matches the uniqueness of the product that's being sold that there are benefits that consumers feel special. And so much of that comes from rewarding them and giving them those exclusive access.
Claus Lauter: Let's talk about what makes a customer special, a loyalty program.
I mean, I know the threaded airlines where you get your points and I'm completely annoyed and there's better ways to do that. Give me some examples on how you do a loyalty program, the right way to motivate your customer.
Gabriella Tegen: Excellent question. I got off a call yesterday with, um, I'll say a, an apparel company that is one of the, one of the larger companies, um, in the Shopify ecosystem.
And they have a pretty extensive loyalty program. So I'll, I'll speak to that. Obviously keeping the information vague, but it's, it was an interesting conversation because rather than it coming from me and smarter's data, it was coming really from this brand. And what they found was. They really could not calculate the correlation between a loyalty program that is complicated and really detailed.
Um, they could not relate that to sales that would not have come organically. So it was a faulted system. And one thing that you and maybe listeners know, or don't know that I've learned, you know, on this journey of loyalty is, Unredeemed loyalty points count towards your liability as a business. So this is a major problem for them.
Really interesting to think about it from the financial, you know, CFO perspective that I don't always have the chance to, but it was a really interesting conversation. And the long story short is. They, with their current loyalty provider, didn't have the access to data. First of all, they didn't have anyone telling them or advising them on what the impact of loyalty was.
And ultimately, after we did some thorough analysis for them, it was found that, to be honest with you, simple 1 referrals were the most impactful loyalty program that they had. People like the product and want to share that information with their friends and family. And an over cumbersome point system was actually really, it became just too complicated for their consumers.
We'll leave it at that.
Claus Lauter: Okay. No, I can feel that. Sam, I would be annoyed if you get 5 points here and 10 points there and then it's really complicated and no one has time and just the power to compute that. When it comes to subscriptions and loyalty, um, the biggest problem I think is churn. So losing customers along the way, are there any kinds of specific strategies that you would recommend to our listeners to keep churn as low as possible?
Gabriella Tegen: Absolutely. And actually part of that answer is an answer to the previous question that I didn't, uh, didn't get to, is You want to create that experience that not only rewards them. So, for example, through celebrating their birthday, celebrating the anniversary that they have through your subscription, um, but you want to think about the fundamentals of why someone is coming to your brand.
What is it about your brand or product or both that resonates? Is it the community? Is it the product? Is it the marketing? Is it the, you know, eco friendly concept or the message behind the brand? Is it the story? Is it that they saw you on shark tank? Whatever that is. And you want to leverage that. So. If a number of our brands are, you know, really heavy on the community side, that is why people keep coming back.
They like the forums. They like the community. We bring it all in 1 place. And then we recognize members for certain milestones. So, for example, being, um, you know, the longest subscriber or celebrating 1 month of active subscription. That's that's major. And so the 1st step is really identifying as a brand what that thing is.
And building around that.
Claus Lauter: Hey, Claus here. Just a quick one. If you like the content of this episode, sign up for our free newsletter and become a Smarter Shopify merchant in just 7 minutes per week. We curate content from more than 50 sources, saving you hours of research and helping you stay on top of your e commerce game with the latest news, insights, and trends.
Every Thursday in your inbox, 100 percent free. Join now at newsletter. ecommercecoffeebreak. com. That is newsletter. ecommercecoffeebreak. com. And now back to the show. That makes perfect sense. Now, you were busy building loyalty in the Smarter app and bringing these two things together. Let's talk a little bit from the practical side.
Talk me through the process. How does it look for a Shopify merchant working with it?
Gabriella Tegen: I will preface this by saying we offer both self serve options where you can go on your own and set up Smarter. You can also utilize an agency. We have a great network. If you'd like. We also offer implementation in house.
So typically, uh, that's what we recommend because we'd like getting to know our brands. It doesn't always work out because people sometimes are on their own schedules, but that certainly is an option. Regardless, the steps are very similar. Um, but I'll focus on that one. We would do a kickoff call, understand your business's needs, goals for the next quarter, year, et cetera, and then work towards those goals.
The setup is. You know, simple, I would like to say, but ultimately it's a big impact on your business. Recurring revenue is so important that it's definitely not a turn it on. It requires thought. So we like to be part of that thought process because we do work with so many brands and have the privilege of being able to advise neither here or there.
You install the app and there's a walkthrough of the platform that allows you to set up subscriptions and then set up what you define as loyalty, whether it's redeeming points, redeeming, um, only for referrals, you can really design the journey that works for you and your brand. And then, if you are already offering subscriptions, we do offer in house migration.
That's. You know, the number 1 question that we get is we have a list of, you know, 10, 000 active subscribers. What happens with those? And that's, that's usually where the biggest friction comes in is people are understandably worried because it's really sensitive information. It's we would say your highest value clients.
Um, and so you need to make sure that that's seamless. We have an engineering team that focuses on that. And we do handle that portion of implementation, regardless of if you set up yourself or not. It's really sensitive information, billing identity. So, um, so we have a programmatic way of handling that. I hope that answers your question.
Claus Lauter: It definitely does. One question that comes to mind. Loyalty works I think on both sides of subscription. So getting a loyal customer into a subscription and then keeping a subscriber through loyalty, a subscriber over time. How does that work? How would you build this together to make it work?
Gabriella Tegen: First of all, someone doesn't have to subscribe on the first purchase.
That is a misconception we hear a lot is how do we get a first time visitor to subscribe and while we are, of course in in the subscription business. I would be remiss if I didn't say that that is not the end all be all what we want to do is create a loyalty program that incentivizes people who either are willing to try the product or already love the product.
It's okay. If they bought it before and some, some ways of converting to subscription that that encapsulate the loyalty program could be bonus points. So sign up today and get 100 points for subscribing. Um, that's Potentially, even in addition to the 10 percent off that you're offering for subscribe and save.
So there are ways to be creative around that. Um, definitely things like swag in the 1st order. We see as a pretty cost effective way. It's a matter of. You know, slippers, if you're a beauty brand, or a hat, if you're an athleisure company stickers for kids, um, Brands really do go a long way. So creating special surprise and delight elements is another way of really marketing that why you should subscribe through loyalty and then post sale.
It's, it's engaging with, again, what goes, it goes back to the brand and what they're trying to accomplish. If they're a community oriented brand, maybe it's points for sharing the product on, on social media or. Communicating in the forum for every post. You get 5 points. Um, if you are rewarding people for, you know, buying more product.
Right that's a really common common 1 you get different tiers. So once you spent 100 dollars with the brand, you go up to tier 2. After that points count for twice as much instead of one.
Claus Lauter: I think you just gave a ton of tips to our listeners to our merchants out there on how they can structure their loyalty program.
Um, does your team help merchants with coming up with ideas and implementing them along the way?
Gabriella Tegen: Absolutely. That's, that's the team's favorite thing to do, frankly. Um, our account management team is incredible and they work with merchants all day on Not only setting up smarter, but ultimately it's being that strategic partner.
That's that's our end goal. It it's part of the smarter package. Right? So it's not something that we charge additional for. It's not a service that we offer. It's just what comes with the platform. And that basically entails, um, you know, an analysis on the current business. A. A review of what the goals are that I mentioned earlier, so quarterly annual reviews, and then we also incorporate essentially the business metrics and how we can best work around again liability or gross margin any concerns that they have around their financials to make a loyalty program that works for them.
Claus Lauter: You mentioned earlier in the example that you gave a customer who had problems figuring out how much the loyalty program is worth for them. Do you offer any kind of analytics on inside tools to help? And if yes, what kind of KPIs do I need to look at?
Gabriella Tegen: We both offer a part of the platform that is Insights and analytics.
We also have actually weekly reports that go out over email that summarize how your business is doing month over month. Our goal is we want to make it as easy for brands to understand how their business is doing and make changes accordingly if, if they need to. But secondly, and again, something really that, you know, excites the team here.
So if you're a brand listening, please do reach out because it. It's really fun to work on is that more bespoke analysis again, it's something that we do for our brands just because they're their brands on smarter and we, we love working with them is and yes, there again, it's, it's, it's bespoke. So there are many ways to do it, but typically what we'll do is compare 2 different cohorts or.
Same cohort, but 2 different segments. So maybe the group of folks that did enroll into the loyalty program and did subscribe versus those that subscribe, but didn't enroll in the loyalty program, whatever the case is, um, and then perform an analysis to see what is actually working for your business.
Claus Lauter: Okay. That sounds good. I think there's a lot of AB testing before you come to the conclusion what works best in your business. Now, you're called smarter and AI is the big thing out there. I think smart, being smart in AI is one thing. What's happening in the subscription and loyalty ecosphere when it comes to artificial intelligence?
Gabriella Tegen: We're certainly leveraging BI and predictive analysis in our analytics platform. The next step is to explore AI further. Frankly, we don't believe it's there yet. I think a lot of companies are speaking to AI and, um, I think it's a buzzword. So we are watching. We are keeping an eye on it. I do think there are some really, um, admirational use cases that are taking place in e commerce today.
I think one that's really interesting for brands to look at is customer support chat through AI. And then obviously if there's an altercation or, you know, something needs to be. Brought up to humans. That's typically the flow that we see that has saved brands. I know a ton of money, but I think leveraging it from billing standpoint, from a experience standpoint, we have done the research.
We don't believe it's there yet.
Claus Lauter: You mentioned before that you're working in a lot of verticals, industries, company sizes. Who's your perfect customer to start with?
Gabriella Tegen: What we have kind of played around with internally is that our, and I don't know if I'm, I don't know if this is internal language or not to be honest, but I really like it is we define our customer as the serious operator on Shopify.
So what we noticed is our brands do consist of this and they are the ones that when taking their business seriously from a business perspective, so really planning their business, they plan a year ahead. They have an idea of what inventory they need. They know what products they're going to release and what marketing strategy they're going to employ, deploy, excuse me.
We have had less success historically, frankly speaking, with brands that want to turn on a new. Products for sale 20 minutes from now, right? So that planning element is is serious. I mean, you laugh, but, you know, it happens all the time. That's serious. Operator is our golden child. So to speak. We'd love being a part of that planning process.
We'd love when brands allow us to be in those conversations and we see the proof in the numbers. Those are the brands that that do the best.
Claus Lauter: Yeah, I think having a subscription program and a loyalty rewards program is something serious that you really need to think about. And switching on at 20 minutes after you have the idea might be not a good idea.
How does your pricing structure work?
Gabriella Tegen: We intentionally are pretty competitive. We like to give brands the ability to get started with subscriptions at a low cost. So you can get started for as little as 99 a month. Um, we have custom plans that go up from there. And really it's. It's build your own path, depending on what you want as a brand to accomplish, we create, um, that custom experience for you.
Claus Lauter: Okay, cool. Before we come to the end of the coffee break today, is there anything that you want to share with our listeners that we haven't covered yet?
Gabriella Tegen: I'm so grateful for the conversation. I hope that we have more chances to talk in the future. Um, and now keep an eye out for Smarter. We have some really exciting updates coming throughout the rest of the year, so I'll tease that.
Claus Lauter: Okay, perfect. Where can people find out more about you?
Gabriella Tegen: Smarter. com, add me on LinkedIn, do your thing.
Claus Lauter: Well, I will put the links in the show notes as always and to our listeners, reach out to Smarter, try it out. I think it's a great system and it will reduce your tech stack in your Shopify store.
Gabriella, thanks so much for your time today. And I hope to talk to you soon again.
Gabriella Tegen: Talk to you soon. Thank you so much.
Claus Lauter: Hey, Claus here. Thank you for joining me on another episode of the e-Commerce Coffee Break podcast. Before you go, I'd like to ask two things from you. First, please help me with the algorithm so I can bring more impactful guests on the show.
It will make it also easier for others to discover the podcast simply like, comment, and subscribe in the app. using to listen to the podcast and even better if you could leave a rating. And finally, sign up for our free newsletter and become a smarter Shopify merchant in just seven minutes per week. We create content from more than 50 sources, saving you hours of research and helping you stay on top of your e commerce game with the latest news, insights, and trends.
Every Thursday in your inbox, 100 percent free. Join now at newsletter. ecommercecoffeebreak. com. That is newsletter. ecommercecoffeebreak. com. Thanks again, and I'll catch you in the next episode. Have a good one.
