Flourish in a Flash: Affiliate Marketing Insights for Retailers

Episode Transcript

Please note: Transcripts are computer generated.

Holly Glowaty 0:04

You're listening to the flourish and a flash podcast with the flourish team does Holly Kristen and Erica. All right. Hello, everyone and welcome to flourish in a flash. And we're excited because today we have a special guest with us. And we're going to be talking about the intersection of affiliate programs with loyalty. So I'm going to have Julia introduce himself and tell you guys a little bit about what she does. So Julia, welcome to the show.

Julia Hochstein 0:37

Thanks, everyone. And thank you, Holly for having me here. So my name is Julia Hochstein, and I manage the affiliate program here at Zoro.com. So I have been the senior affiliate manager here for about the last year prior to that I launched the affiliate program. And I'm just super excited to be here and to talk a little bit about how we're using our affiliate program to kind of supplement our company's loyalty opportunities in this space.

Holly Glowaty 1:07

And I think it's really interesting and timely conversation. Because, you know, Julia and I started talking because we were kind of seeing this interesting overlap, where affiliate and loyalty need to play together. But maybe you don't need something so formal to create loyal customers, right? So how are you guys using affiliate right now to help create loyal customers and bring them in your onto your website?

Julia Hochstein 1:33

Yes, I think that's actually kind of a unique answer that we have here in kind of a unique approach to hapa approach how we really started to think about affiliate being a loyalty play and not just a not just a general channel that is just driving sales. So when affiliate was launched, at Zoro we were launch as part of the acquisition team and every affiliate program for those of you who don't have an affiliate marketing program or kind of questioning where your affiliate marketing program may sit in your organization, every program is going to be different and serve different needs for the organization. And what we started to notice from the sales information we were getting was our affiliate program was responsible for more than just acquisition, you were actually driving some really interesting customer behaviors for the company. And so a few years back, we transitioned the affiliate team to not just sit under acquisition, but rather sit under our direct marketing and loyalty programs team. That's not the official title. But that's kind of the the team's general structure is to kind of figure out ways we can engage with our customers better. And as a company, we don't have an official loyalty program. So everything that we're working on as an organization really relies on these indirect ways that we can create loyalty and affiliate happened to kind of fit in that mold.

Holly Glowaty 3:03

That's interesting. And you said something there about how you know you were looking at the data and saw that there were interesting consumer behaviors happening. So I think a good place to start is, you know, what are you guys looking at? Like, what do you track in order to understand the effectiveness of an affiliate program and how it's changing orincentivizing your consumer behaviors?

Julia Hochstein 3:26

Sure. So one of the things that I think is really important when you watch an affiliate program from the beginning, is to if you can, if your organization is set up and has a little bit of free space to allow you to do is really just let your your program run without too many expectations in one one direction or another. So don't get me wrong. There may be times when it is very vital for your organization to set up affiliate to only be an acquisition engine, or to only be a lead generation and I totally get that and if that's where you're at. That's great. But at Zoro because of the space we're in, and this is a helpful caveat we sell specifically to business customers, there aren't a lot of people that are doing direct to business customers in the retail space. So we're in kind of some uncharted waters. So we gave the affiliate program some room to grow and to breathe and start seeing what types of behaviors we perceive. And one of the things that we noticed is customers that we were aggregating in the affiliate channel, were more likely to purchase sooner than a new customers acquiring elsewhere. So if they were avquired in affiliate, or they were purchasing in late, they were coming back more frequently with us sooner than our customers that may have been acquired outside of the affiliate channel or who were not regularly participating within affiliate. So that became kind of an interesting metric that we started to notice for the organization. A couple of the other things kind of tie into what we're looking at When we think about have a have a customer who is successful for us, or a customer who's kind of our ideal person, and that's somebody who's shopping across multiple category level. So, affiliate again, when we started digging into data, we could really point to it and say these customers are engaged. They're spending longer on the website, they're sending across more categories. So generally speaking, when affiliate is in the mix, these things are happening. And it's not just unique to Zoro. So, at the affiliate conference I was at last week, they just spoke about some really exciting metrics about what engagement looks like and how it goes up when affiliate is in the marketing mix. And I'm trying to think of what the exact number was off the top of my head, but it was absolutely crazy. I think they're going to be presenting a white paper about it soon. Okay, because we're literally just released during the conference last Tuesday or Wednesday.

Holly Glowaty 6:03

That's really interesting. And I think, you know, one of the one of the topics I think we sort of wrestle with a lot is, is it more important to have people in a loyalty program or exhibiting loyal behaviors? I think, you know, it's an interesting conversation because yes, it'd be wonderful if you could have everything within your own ecosystem. But I think that the question and maybe the evolution of what it means to have loyal customers is kind of, it's kind of changing. In my opinion, I think it's interesting to say, well, these people already behaving in a loyal way. How do we use our affiliate channel to create i don't i don't know if it's even create a loyalty program and I'm using air quotes. I know this is a podcast, quotes go nowhere for everybody. But you know, I think there's like a really interesting conversation here. It's either how do you transition them? Or do you just keep them that affiliate channel and say, let's just keep encouraging.

Julia Hochstein 7:03

Yeah. So I mean, I think that's that's kind of the age old question that marketers get. And there's so many philosophies on it right. So in this is where, what I'm here today talking to people about I'm sure you could find find five affiliate marketers who would have five very different opinions on that, right. But from my from my perspective, and there are case studies out there that people have done, if you think about it, if you're not the Amazons of the world, or you know, targets that have a pretty good affinity with their customers as well, but you sell items, so a broad category of items. And you have a very, very loyal customer base to you, they may stick around. But the one question that I would ask most people is, if I were to come to you and say you need to purchase floormats for your new car, and you don't know where you want to get them from you Amazon doesn't carry the brand that you want. So you start sourcing it. And you might find that there are places that you would prefer to purchase from through a loyalty publisher. So these are sites like now Rakuten Rewards, they formally used to be known as ebates for those of you listening aren't familiar with the name change, it could be United Mileage Plus, it could be Honey is a new up and coming in the loyalty space. And all of these loyalty publishers are all currying favor with consumers to create loyalty to those sites. Now, some people in the affiliate space and some people in the CMO chair or whatever else see that as a problem, because the loyalty starts with that publisher. So what they'll do and a knee jerk reaction to say, Well, I won't work with them. I'm not going to do that. And when they do that, what ends up happening is case study after case study after case study, the brand pulls out thinks that the loyalty that they have earned with their customers is exclusive to them and if they just pull out, the customers that have come directly to the cash come directly to the merchant, and not through to the cashback site. And that doesn't happen. What ends up happening for these cashback sites, these publishers like rapidly and like, United mileage plus and more, is that the customer ends up saying, My rewards my points, my cashback is more important to me than purchasing through this merchant, I can purchase the same items for merchant Y who's giving me cashback. And that's a really important takeaway because at a certain point as a brand if you're not ready to commit fully to, or maybe you are willing, that you don't have the resources to commit fully to a very good loyalty program and have a broad appeal to your audience. There are publishers out there that can help provide glimpses of loyalty for you without causing you to Without having to invest heavily into your own loyalty space. And that's just affiliate, we ran it from all of our marketing channels. So we like I said at the beginning, we don't have a formalized loyalty program as of yet. But we have different ways that we're creating some customer affinity to what we do, based on the information that we know about them the things that they like, and trying to present things back to them based on that information. So we see that loyalty is kind of more organic, and less about trying to move customers from one channel to another just because it fits our needs better.

Holly Glowaty 10:37

See that's really interesting, because when you think about it, really as you were speaking, I thought of like two different things. So number one, you know, when we're working with a gift card program, let's say and one of the loyalty publishers wants us to be a part of their program. It is that very sales pitch that you just said where it's, you know, get these people are earning points because they want those miles. They want, they're loyal to the program exactly what what's funny is the sales pitch they they give you to get you into the program is very thing that seems to also make people say, well, they're not loyal to them. They're loyal to us now that, and people forget. That's why you got in, in the very first place, right?

Julia Hochstein 11:19

Yeah. Yeah, it's, I mean, it is a channel eight. And so every organization has to wrestle with that. But what I always do is take it back to my experience as a customer. I am probably as and I don't know, it's because we're all little jaded, but as an online shopper working for an ecommerce organization, I honestly should be a better online shopper than I am. I know all the, you know, I know the hoops to jump through. I know all of the tricks of the trade. I should be much better at it than I am. But the reality is, if I need to I use that floormat example because this literally happened to me. I think bought a new car, I wanted to get something similar to Weather Tech formats for my car. Weather Tech has an extremely high shipping rate if the price to ship off of their website is pretty high. I'm close enough to the Weather Tech factory that in theory, I could go to the factory store, but it's just far enough away for me not to. And so I started to think there's got to be another alternative that's sold by somebody else because Weather Tech also don't sell on a lot of other merchant sites. I found the hefty brand I think it's called there's I don't know, I don't know who I found. But the reality is I found a competitor who sold on Amazon and who sold on walmart.com. When I thought about it, it's $100 purchase. And I can either choose to go to Amazon who already has my loyalty because I'm an Amazon Prime member. Technically, they should have won my sale but Walmart ended up winning it because they offer cashback and so I ended up getting cash back on that order. So that's how all of this plays out. You can you can run the books and say well technically you know Julia has already shopped at Walmart and we should just have our own loyalty program and Amazon's over here saying well we have our loyalty we have Prime membership with her she's got she bought like four Kindles her kid, you know, she buys everything through us like we have are locked down and the reality is they don't because the way that they kind of play in the cashback space is a little bit territorial of this idea that we have our cashback system and maybe we give it to a few publishers but not to everybody and they lost the sale because of so there are all of those arguments that I always try and take it back to how do I shop? How does my mom shop? How does my brother shop and how does my husband shop and a kind of thinking of that holistic realm I lost my dad out of that because he shops by going into a store directly online is still scary to him. So going like three times a week so Walmart and he's totally happy with it. But yeah asked him to purchase something online and he looks like a deer in headlights.

Holly Glowaty 14:10

Well, you know, what's interesting is what you're saying without saying the word is that you're creating personalized experiences for everybody. And any anything you go to, I'm sure at your conference, the last like four I've been to personalization was the buzzword, right? And we live into, like, we live in a society where you can create the experience you want, right? Like, I can personalize my shopping for exactly how I want to do it anymore, then the consumer is going to lead that process. And as long as you're watching what the consumers doing, I think you can create a really great customer for your business.

Julia Hochstein 14:49

Exactly. And that's where that's where it, it becomes incumbent on the merchants to be very mindful of the relationships they're having. So again, kind of going back to you you'll have five different affiliate managers with five different takes on this. And I'm sure if you were to Google after our chat today, and for the listeners, if you were to look for it, you have five different opinions on on loyalty, for example, and how that interacts with, with affiliate. But I think the key thing that I often find is missing is mistrust on both sides of the relationship, a lot of the times so it could be that the merchant feels like the public, you know, they go into the relationship already thinking, well, these were already our customers. So, you know, we're giving you money that we really don't need to give you. And then sometimes your publisher some really cool we own this customer data. There's only so much information or so much we need to do to help you we decide to work with this person or that person. And that is actually the antithesis of what affiliate marketing is to me and affiliate marketing is really where those two those two points of view need at a corner and it really have a dialogue. So it works well for us because we're constantly talking to our publishers about not just this revenue number, everybody gets paid on revenue through our affiliate program to get paid on the commission. Most affiliate programs run that way, though, not all, but we don't just talk to our publishers about their revenue, contribution to the program. Instead, when we prepped for the conference, we were at last week and had 20 some meetings. Each of our publishers had a unique data point that we're looking at for how they contribute to the program. So for some of our publishers, we have learned through the data that they have that they may under index on a repeat rate. So what are the things that we can do to personalize or work on their repeat rate? Maybe it's working with how their marketing to their customers, maybe we're not investing enough with and there's a lot of different components. You may have other publishers where we notice they do really well selling for us without a promo code being attached? What can we do to work with them directly to increase some areas where we'd like to have a better percent gp rate for us. So I don't, before programs that are just wanting to be very hands off, there is that responsibility that has to be had if you do want to use the channel to affect customer behavior, this isn't a channel where you just put an algorithm to work. And everything is nice and pretty. And people are trying to work on that if affiliate don't get me wrong. But the reality is that good affiliate management and programs that can flourish are really coming from a place where people are actively engaged in the relationship process of affiliate, and using whatever information they have, whether it's really original data that they're getting, like we're starting to present to our publishers, or even anecdotal information that you can start to collect when you're just getting your program launched. When we were launching our program, there was a lot of skepticism on whether or not we were actually getting business consumers through the affiliate channel. And I could tell people, we didn't have the official data yet, we were still kind of building up what our data organization looked like. And I could tell them, you know, every order line by line week by week, and I've seen email addresses that are definitely business customers, they're like, mike@mikesplumbing.com or whatever else. And that's not a real email address. I hope whatever the little disclaimer you put for a movie or a book, this is all that's just a madeup email. But the reality is, we were seeing these people come through well before we had the actual data points to come through and that was because of very manual work that literally any affiliate manager could be doing with their program. If they work in house, this kind of really taking them a look at their customer orders and saying this is this is the feeling I'm getting out of what the purchases are showing me whether it's I'm seeing business customers or I'm seeing I'm seeing an organization type for us that's purchasing with us or it could even need products that are trending that you know as an organization are good loyalty products for you products that tend to drive repeat and maybe for a retail merchant, it could be their consumables, for example. Or maybe it's if you purchase you know, this product x, you always need to buy product, y to replace parts for it. So, there's a lot of that that went on in the beginning too.

Holly Glowaty 19:40

Well, it sounds like you take a very integrated approach which you know, is something quite honestly on our on the podcast, we evangelize all the time is that none of this stuff is set it and forget it. And yes, as much as we would all like that to be the case. It's more the more you utilize partnerships and the more that you dig into your data and look for those connections, that's when programs and channels become more than just a program or a channel, they become a tool, they become helpful to other departments, and they become really rich understandings of who your consumer is.

Julia Hochstein 20:19

Yes, exactly. I mean, that is at the heart, I think of what I worry that marketers that we start to forget, as we get as people start dropping these things like our algorithm or through the, you know, data use of AI to look at this particular data set. We got this, this and this. And there's something to be said about the good old intuition you get when you sit back and think about the experience because the reality is every shopper you're encountering, through the site that you're working, the e commerce site that you're on has more than likely been somebody that You either know, in sense of their profile or that you are. So if you don't feel comfortable with what's going on, or if you were to read something, so again, this goes well beyond affiliate, but just in general for user experience, if you put yourself in your in the shoes of that customer, or you put your mom that in those shoes, or your grandparent or whomever else, and you think they'd have a problem with it, your intuition is telling you something. There might be great data out there. And I'm not discounting all of the wonderful data work that can be done. But the reality is, that's your first step. And as marketers, I think we're very quickly jumping to this idea that if we could just find the right algorithm, everything would be solved. And that's not how humans work. And that's not we don't always make logical decisions. We don't always do what's in our best interest. We do what seems shiny and new and all of these things. So yeah, so in that respect, I think that's for me what's exciting about affiliate marketing too, because we are still we use data Don't get me wrong, there's people moving in that direction, but there's still so much that is on a person to person basis,

Holly Glowaty 22:11

For sure. Well, and one question I have for you, so we've kind of talked about how there doesn't need to be, you know, necessarily a formal loyalty program. But let's say you do have one. And and I know sometimes there is this sort of like, I don't know it, like sometimes people feel like, Well, everyone from affiliate should be in the loyalty program, and they don't want to double dip, so to speak. Um, how do you I mean, what's a good way to think about navigating this or working together between those two departments? Do you have any insights there anything that you've seen, you think works really well or even a great first step?

Julia Hochstein 22:47

So I think the first step is if you don't have one or the other, bringing the teams together as you're thinking about launching it. So for example, if and we're constantly in talks about what loyalty will look like. This year, five years from now, 10 years from now as as our brand grows and changes, but the biggest thing is to involve the stakeholders early on. What that looks like for affiliate more specifically is if you made the choice to say, okay, we think that all loyalty should only be rewarded through my company directly. That's an okay decision. And there may be or that could be not a decision, what I'll say is, you know, you want to dig into the data and do some research. But if you do decide that that's the best of in the best interest for your organization, then that affiliate manager is going to have a lot of going to have a lot of very tough conversations. If you've hired somebody in house or even if you're working with an agency, or a network, a lot of those affiliate managers have had relationships with these publishers that may predate their initial employment or their relationship with you. So there are several publishers that I have worked with for the last seven years, I've been at my current company for five. So when we have to go to them with tough conversations, I'm not only managing the current relationship for my company and for our affiliate program, but also forward looking at where it needs to go. And so if you're thinking about going down this loyalty path involving your affiliate manager early on, is super helpful for the tough conversations. But then there's also the cool conversations that we can have about how, okay, maybe we cut back a little bit in cashback opportunities. But did you know we have a whole plethora of ways that we can help market a loyalty program using our publishers? There are hundreds of different types of websites that you could be working with. I mean, everybody boils them down to about five different categories. But the reality is for every loyalty publisher, you can't work it with my able to work with a review publisher to help say, hey, let's talk about this loyalty program, it will pay you for a sign up and for qualified lead. So there's a lot of different ways your affiliate team can help supplement. And too often I think there is that a little bit of adversarial siloed thinking that comes out and oh, if I include them too soon, they're going to tell me no immediately or, oh, they're just trying to take away my steam from my channels. I can't work with them. And the reality is, affiliate is extremely nimble. There's a lot of things you can do in the affiliate channel. So as long as the decision is being made for the best case scenario for business, and everybody's having an honest conversation about that there's so much you can do.

Holly Glowaty 25:45

I totally agree. And this has been such a fun conversation Julia, I'm your insight has been super valuable today. And I think we'll probably get a lot of great feedback and some interesting questions. So you guys if you do have any other question, We'll happily, you know, send them over to Julia and we can keep the conversation going. But, Julia, thanks so much for joining us on Flourish in the Flash today. We really appreciate it.

Julia Hochstein 26:11

Thank you so much. It's been it's been really exciting getting to know you guys over there. And as Holly said, if you have any questions, feel free to reach out.

Holly Glowaty 26:20

Flourish in a Flash is produced by K+H Connection, a branded currency consulting firm. You can learn more about K+H at khconnection.com. And you can always find out more about Flourish and the Flourish conference at flourishcon.com or follow us on all of our socials on Twitter, Facebook and LinkedIn it's at flourishcon and on Instagram, it's at flourish_con

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