Soap.com Wants to Be Customers’ Fave
You would think that a company with a broad product selection that offered convenient online ordering, competitive pricing, free two-day delivery on purchases of $39 or more and a 365-day return policy would have pretty loyal customers.
According to Teju Prabhakar, director of marketing at Soap.com, all those things have helped the company develop a loyal customer base. The company’s goal, however, is to do even better and so it has rolled out its "My 5 Faves" program. The initiative allows consumers to choose a single favorite product from five categories. Every time they order those items, they  receive a 10 percent discount on the price. If items are on sale, the faves’ discount will be added. The same is true of purchases where consumers use manufacturer coupons. Consumers can change faves every 90 days.
"Our intention was always to launch a retention or loyalty program," Mr. Â Prabhakar told RetailWire in a recent interview. "We did a lot of research and saw that people really responded to rewards that were instant. We wanted a program where you could come back and be rewarded for shopping immediately."
Soap.com also wanted to create a program that showcased its product selection.
"The fact that you can choose from five categories, makes it more likely that you can go into a screen and see that you have a 10 percent discount that you’re not using right now, for example on vitamins, so why don’t you buy vitamins because they’re on Soap.com, as well," said Mr. Prabhakar.
The e-tailer is not concerned about margin erosion with the discounts.
"It’s something we had planned for already. We look at it, at the end of the day, as a price decrease for our customers and a way to thank them for shopping. We see it as something that will pay for itself from a retention, order size and frequency standpoint."
Soap.com customers have responded positively.
"The numbers look great and we haven’t even really been marketing the program yet. We only sent one email to our customer base. We have a lot planned in terms of inserts to let our customers know, possibly other types of broad reach media," said Mr. Prabhakar.
Vendors also see opportunities with the faves program.
"You can imagine the types of data that might be available to a vendor. We can come up with a list of the top brands that people have chosen as their faves on our site and I think if I were a brand I would really be interested to know how many people have chosen my brand as a favorite," said Mr. Prabhakar. "Those are your brand loyalists so doing something where you can engage that base even further, possibly introduce them to other products etc."
Discussion Questions
Discussion Questions: What do you think of the “My 5 Faves” program from Soap.com? Is this type of program something only an e-tailer can does it have applications in brick & mortar stores, as well?
No – you could do this in brick and mortar through a loyalty card. The bigger problem that soap.com may have is their significantly higher pricing than Walmart. Even with a 10% discount, they are 28% higher on my Tide product (bleach alternative 100oz) and 11% higher on my Dawn dishwashing liquid (hand renewal 28oz refill), just to pick two that were easy to find. So their idea of competitive prices and my idea of competitve prices would be very different.
The instantaneous gratification Soap.com can provide its customers with will generate loyalty, word of mouth and increased sales. That’s just my opinion of course. But it seems apparent that they have developed a delightful customer experience at their site and satisfaction with the products and prices they offer. Am I missing something?
I think it’s a nice, interesting touch. The potential downside is if most customers just order their 5 Faves on a regular basis and don’t make enough incremental purchases of other items.
I think Teju has really nailed it here. He’s getting shoppers to visit multiple parts of his site (time on site up, basket size up) and he’s limiting the total average discount per basket in most cases. So the consumer sees a headline of 10% off and that resounds powerfully…but on a whole basket that could represent only 2-5% off. Nice play.
Dr. Steve, I disagree. This is a very sustainable competitive advantage for an online retailer versus a brick and mortar retailer. Every day, online retailing becomes easier and easier and with that ease and convenience online retailing will continue to gain retail share.
In our household there is just my wife and me. We have been using FreshDirect for several years, but because there are only two of us, we would order only every two or three weeks because we could not meet the minimum for free delivery. Early this year they ran a promotion, dropping the minimum for a couple of months. We took advantage of it and ordered every week, sometime only a loaf of bread and a few containers of milk. When the promotion ended, we went back to the less frequent ordering.
FreshDirect offers a program like Amazon’s Prime. Last night my wife says, “I really don’t care if it makes financial sense, let’s pay for the no minimum program, then I can order whatever I want, whenever I want and I don’t have to think about it.”
Mind you, we have a supermarket less than 30 yards from our apartment. But, the driving force in the decision is simply, “I DON’T HAVE TO THINK ABOUT IT.”
I would guess that there are very few people reading this that have a supermarket closer and more convenient than we do. Yet, even with that, the most convenient supermarket is the one on our computer.
“My Five Faves” will work in the same way. It is easy. It is convenient. You don’t have to think about it. And, you know you are getting a deal, even if there is a better deal somewhere out here.
While the business model of an online retailer far surpasses the business model of brick and mortar, the sustainable competitive advantage of online is convenience.
One of the laws of promotions is that simple programs rarely stay that way, especially when shopper data is involved.
In-store loyalty card programs began as two-tier pricing–members’ only discounts across categories–but have taken off as targeted manufacturer promotions powered by data.
5 Faves begins by allowing shoppers to choose on an even playing field. Yet there’s a powerful incentive for manufacturers to slant the field to their advantage.
There can be brand family cross-promotions (now try Brand A in Category B), and additional targeted savings (+5% for the holidays if you make Brand B your Fave).
In this case, “winning” a shopper’s participation in the promotion means exclusive advantage for the next 90 days, not a single purchase.
If it drives repeat traffic, it’s a success.
It’s good to see Soap.com doesn’t take customer loyalty for granted. Even better to see the e-tailer turn the stale frequent shopper card on its head and add a nice touch of creativity. The “My 5 Faves” program essentially allows shoppers to define their own rewards. That’s a nice touch of personalization that obviously goes missing from the weekly sales circular.
More retailers should follow the same creative path, especially bricks-and-mortar stores where consumers still do most of the shopping for their pantry and medicine cabinet goods. For example, a supermarket chain could create a tiered loyalty program, allowing those who reach varying levels to log on to the website, define their reward and then attach the reward to their loyalty card so the discount is automatically deducted when the card is swiped in-store. It could also work with an in-store kiosk. The key here is thinking outside the traditional loyalty box to add a touch of creative personalization.
This is a great idea and proves that customer loyalty programs can be an inherent part of a retailer’s model. Soap.com is better positioning themselves for the future, by giving their customers what they want. Isn’t this what great retailing is all about?
Thanks to everyone for sharing their thoughts on the My 5 Faves program we’ve just launched at Soap.com. I sincerely enjoyed reading the thoughts and feedback of others in the industry, both positive and negative. At Quidsi, we’re always looking for ways to make the consumer experience more delightful across our 3 (soon to be 4!) sites. We think this will be a great way to create a sticky, repeat shopping experience by engaging with our consumers across their favorite products – of course, only time will tell!