3 DTC Brands on How They Build Customer Loyalty

This talk was originally presented at Commerce+ in 2018 in New York City. In this series, we've pulled together relevant talks from our past events in Sydney, London, and New York.

What is Commerce+

For the last two years, Shopify Plus has hosted Commerce+, a global thought leadership conference that brought together industry leaders to share their knowledge and best practices in the ever-evolving world of commerce.

During this talk, Liz Segran, Staff Writer at Fast Company, chats with Karla Gallardo, CEO ofCuyana, Matt Scanlan, CEO ofNaadam, and Cheryl Kaplan, President ofM.Gemiabout how their brands cultivate customer loyalty and stay ahead of the competition.

This transcript has been edited for clarity.

Segran: I'm excited to introduce you to our panelists who will begin by talking a little bit about themselves, their companies, and the problem they're trying to solve with their business.

Gallardo: I’m Karla Gallardo, the CEO and co-founder of Cuyana. We are a direct-to-consumer brand that focuses on the philosophy of fewer better things. We design and make products for women with the best materials and the best factories in the world and we bring an assortment that's full of essentials for her day to day. The problem we're solving is getting access to top-notch quality for her daily products and we did that by creating a really best in class supply chain and then providing this assortment with this lifestyle of fewer better things.

Scanlan: I'm Matt Scanlan, the CEO and co-founder of Naadam, a direct-to-consumer brand. We make cashmere sweaters and we do that by building a supply chain that focuses on transparency to do three things: make it totally sustainable, make it cost less, and make it better than other people.

Kaplan: I'm Cheryl Kaplan. I'm the president and one of the co-founders at M.Gemi and the problem that M.Gemi is trying to solve is bringing the beautiful handmade Italian craftsmanship to the U.S. in a whole new way. Giving our U.S. clients access to beautifully designed truly handmade not just componentry, but end-to-end Italian-made shoes at prices that are half of what our competitors are selling them for.

Segran: I'm Liz Segran. I am a writer at Fast Company. I mostly cover the fashion industry and so I've written about all of these brands and so if you want to look up what they do, I've written about all of them.

Every day there are more brands popping up, competing sometimes very directly with you. To start, how do you even get somebody's attention now? It's getting harder and harder, so what's your strategy for capturing somebody's attention?

Scanlan: If you live in New York, you probably saw posters of two goats having sex everywhere. We put these posters up and on top of them, we wrote “cashmere coming soon.” I thought it was really funny, but some people found it to be tasteless. For us, it's not only doing things that we think are a little bolder, but also staying consistent. It's very easy across the ecosystem of being online to dip, in terms of being something somewhere and something different somewhere else. It's just hard to run these companies with consistency in brand to owner, brand voice, and image. So we find that consistency really helps. You know who we are, like a person, and then we try and jab a little bit and do things that are weird.

Segran: Cheryl, there's a million shoe companies that are popping up that are doing similar things to you that are maybe with a very specific type of shoe like a sneaker but so how do you make sure that somebody's paying attention to M.Gemi and not this other new startup?

Kaplan: First of all, we are a lifestyle brand, which helps, so we're not in just one classification, but we're working with about 15 different family-owned workshops across Italy. So we're differentiated in our assortment goods, our price point, and our supply chain, which I know we'll talk more about.

In terms of marketing and where you show up, I think one of the biggest things that we've learned is that the world changes so quickly. When we launched three and a half years ago, the things that were working for us are now things that everyone's doing, so you really have to stay on top of it.

[For example,] we started with influencers, [and] we eventually moved off of that onto micro-influencers. We started in the retail space and then launched a mobile truck that travels around. Instagram Live is something new that we've been doing. We're constantly looking for new ways to pop up wherever our clients are to make sure that it's relevant to them and it doesn't just get lost in the shuffle. Changing up creative constantly and making it new and different.

Segran: It sounds like you can't take a break. You constantly have to be looking to get your customer's attention. Is that true for you too?

Gallardo: Yeah. Definitely. The world changes all the time and we also approach it as a multichannel strategy. Our customer is online and on social media, so our team focuses on building the best product. I think this is how we internally ensure customer loyalty to focus on two key things: the first one is top-notch quality and we don't disappoint our customer there. That's why she keeps coming back. The second thing that we focus on in terms of product is price-per-wear. Being the best price-per-wear in the market for our categories. With that, we ensure that she's just truly happy, and in a long term way. When our customer is happy, she not only comes back for more, but also she tells her friends.

Segran: I think what's at stake now is going beyond that and delighting your customer. How do you do that?

Gallardo: You’re talking a lot about competition, the moment you come up with a super interesting strategy to delight your customer, the rest of the industry follows. So you constantly have to keep innovating and coming up with new ways. As you say, there's a certain level of standards that are just expected from your customer.

Kaplan: Yeah, I agree with that of course. I think also the way in which customer service reacts sometimes when things don't go well, those become our best customers. We have real women and men that answer the phones and the texts. They try on every shoe so that they can give real feedback so it's beyond “I'll look into that for you” or “I’ll get back to you”—just answers for the sake of an answer.

Scanlan: This is a Shopify event, right? We use Shopify and it makes everything so easy in terms of creating a good customer experience for people. Having a nice, normal customer experience that checks off all the boxes is totally mandatory, right? You’ve got to give them a referral program, you’ve got to make seeing the product easy, [and you’ve got to have great] customer service. Everything's got to be very, very easy so we use Shopify Plus and they give us these plugins that make it really easy.

We need to also layer on our differentiating value propositions on top of that. If that's what the three of us are going to do, no matter [where we’re at] in terms of acquiring customers and scale, the added value that differentiates each one of us is our unique value proposition. Incredible product, unique manufacturing, and better prices. You have to stay focused on all that and deliver it no matter what.

Scanlan: Having said that, I think you can be in the right place at the right time. The ultimate objective for our business is brand awareness. We all know brands that start to tip the scale on brand awareness and everyone's like, "Oh s––t, yeah. Heard of that." I think it takes time, I think it takes focus. I think it takes having something unique about that proposition, whether it's quality or supply chain or intention, and we don't pretend to have the answer. I think we know that if we just keep our heads down and just keep on doing what we know we do better than other people, then at least we have a chance to do it right.

Segran: All of you have invested in brick-and-mortar stores recently and are expanding them around the country. What have you noticed about how that changes your customer experience and loyalty among your customers?

Kaplan: When we launched, we were online only but always knew that one of the hurdles in buying footwear online was some people wanting to feel the quality and try things on. They walk in, they're usually shopping with friends. It's a fun experience, they're having maybe an espresso and they're trying on many more shoes than they would try on if they were doing it online.

We call them our super consumers now because they end up buying more, spending more, and returning less. They just have all the perfect metrics but really the expansion for us has been around allowing people to get over that last hurdle.

[On] the website, free shipping, free returns, easy exchanges, fast shipping, and great customer service are all table stakes now.

Segran: I was talking to somebody at lunch and he was talking about millennials and Gen Z—they'll buy something from a brand and then eventually lose interest. They're not going to tell you that they're not shopping with you anymore, right? They're just ghosting, which is apparently how people break up with people these days, and they're doing the same things with brands. How do you even know that you've lost a customer and how do you win them back?

Kaplan: We have about 30 different styles. We are not a huge shoe store. We launch new products every Monday and they go away. It's not about curating and giving you the best three shoes and someone else the best three shoes. Our personalization is much more around the type of customer you are and how we communicate with you. Through data, of course, you can see that someone that used to be engaged isn't engaged anymore and whether that's through the site or whether it's through email channels, I think that is the best way to start to communicate with them differently. If it's one of our best customers that we have a one-to-one relationship with, we would literally call them and reach out to them personally.

Scanlan: We need a safety net on all of that because data's good and running these analyses are good, but they're imperfect to a certain extent. The net has to be community.

You need to fold people into your reasons why you exist—people that actually want to evangelize who you are. They're part of your community so they might miss a season, but if they're indoctrinated—not to be too religious or cult-like—having that is super, super important.

It's the fail safe that we know we can rely on if we stay consistent about the message and what our community is.

Gallardo:我们刚刚开始看这个词OB欧宝娱乐APPs of retention of our customers. We're in a lucky place where our cohorts actually continue to perform through time and I think the key to that is the laser focus that we have on price-per-wear and this value proposition that we really bring to life where she's wearing our products and she realizes what a great purchase it was and then she comes back for more. I think the other thing that really helps us is that we started Cuyana with a hat and that was the first product that we offered to her and we've been building that assortment really thoughtfully and slowly and so there are more reasons for her to come back, buy new products, and grow her wardrobe with us.

Segran: Thank you so much for all of your thoughts on this important issue.