ThirdLove's Loyalty Program Strategy That Boosts Retention & Referrals
Brought to you by WBR Insights
Today, every company is a tech company. Why? Because our fast-paced digital-first world is forcefully transforming all businesses into technology businesses. Whether this is through using technologies such as automation and AI to design and manufacture products themselves or to help target and deliver those products to the right customers in the most convenient way possible, technology is now the driving force behind all successful growth strategies in one way or another.
No industry is immune to this disruption, not even the bra and underwear industry. For decades, the bra shopping experience for women has remained relatively unchanged - head to a store, try on a few pieces, and eventually settle for the least uncomfortable one. But in 2013, Heidi Zak along with her husband David Spector (both ex-Google execs) set out on a mission to revolutionize that experience - using technology to improve the product in terms of fit and comfort, as well as how bras are delivered to the customer and how customer loyalty is maintained.
That same year, Zak and Spector left their jobs to launch ThirdLove - an online-only ecommerce business specializing in bras and a variety of lingerie and underwear for women of all shapes and sizes. "I saw a need in the market," said Zak. "I was in my early 30s and still shopping at Victoria's Secret. But they never had a bra that fit me, because I discovered I was a half-cup size."
Working on a hunch that other women probably faced similar issues when it came to bra fitting, Zak hired lingerie designer Ra'el Cohen (now Chief Creative Officer at ThirdLove) to conduct research into bras and the women who wear them. Enrolling hundreds of women into bra-fitting focus groups and analyzing the fit of various brands, the team discovered that over a third of women fall in between standard cup sizes. ThirdLove began making bras designed from the ground up to provide a better, more comfortable fit, and in spring 2014 launched its premiere online collection, becoming the first bra brand to offer trademarked half-cup sizing.
And that wasn't the only first for the brand. ThirdLove wanted to make sure all its customers were shopping online with the right measurements, and so the ThirdLove app was launched. Built by an in-house team of computer vision and image recognition engineers, the ThirdLove app used machine learning algorithms to analyze photos that a customer took of herself and subsequently recommend ThirdLove bras tailored to her exact size.
(Image source: thirdlove.com)
Zak and Spector continued innovating. They knew that in order to keep delivering bras that fit a wide range of body types better than rival brands - many of which had begun imitating ThirdLove by offering bras in half-cup sizes - they needed more customer data. And so, in 2016, ThirdLove launched the Fit Finder questionnaire - a 60-second website quiz asking customers a variety of questions about the bras they wear, how they fit, their preferences for hooks, and more. Once submitted, answers are then processed through machine learning algorithms to recommend the best bra size and style for each individual customer. The data is further used to help ThirdLove gain more insights into customer needs, preferences, and where the gaps in bra sizes are.
"Our primary goal is more styles in more sizes," said Veronique Powell, Vice President of Operations at ThirdLove. "Just this last June, we launched 24 new bra sizes and we had about 1.3 million people on the waitlist for those sizes. So, there's still an incredible demand for more bra sizes." The average bra brand has about 36 size options - by this point, ThirdLove offered more than 70, and they currently offer 78.
Creating Lifelong Loyalty and Boosting Referrals with VIP Tiers
As of February 2019, more than 12 million shoppers had used the Fit Finder quiz to find their perfect bra size, according to ThirdLove. However, the company still faces a challenge if it is to continue to grow - a challenge that all players in the bra and lingerie industry face. As Erica Richey, ThirdLove's Director of Customer Marketing, points out: "You don't just buy a bra every month. Many people wear a bra for one to two years before they need to make a repeat purchase, so it's not realistic to expect someone to spend $600 every single year on bras."
This creates a problem when building a meaningful loyalty and rewards program to keep customers locked into the ThirdLove brand across long repeat-purchase cycles. The brand knew that in order to prevent customer churn, it needed to consistently provide more value to loyal customers and ensure they feel this additional value with each new purchase they make. In addition, ThirdLove also wanted to revamp its referrals program, which Richey had observed was somewhat clunky and difficult to use. "It involved copy/pasting discount codes, which led to a lot of customer service tickets, and discouraged shoppers from using the program," she said.
ThirdLove turned to commerce marketing cloud company Yotpo to provide a solution to both of these problems. Yotpo built a tiered VIP loyalty program that focused on functional perks to deepen relationships with customers. Yotpo explains that rather than making customers buy a completely new bra drawer every year in order to retain their loyalty status, tiers are created that focus on customers' lifetime spend.
(Image source: yotpo.com)
Through ThirdLove's tiered loyalty program, customers are offered perks - such as exclusive product access and shipping benefits - to add tangible value to each purchase. The benefits increase as customers continue to come back for more. For example, while "Admirers" and "Enthusiasts" can get birthday gifts, only "Devotees" get merchandise giveaways and limited-edition product access. For brands like ThirdLove that create high-quality products that only need replacing infrequently, customers tend to buy more upfront and then progressively less over time. As such, tiers offer an elegant solution because they are specifically designed to encourage shoppers to spend more over the course of their lifetime rather than in a particular year. The results are so far impressive - within three months of launching the program, ThirdLove account creation increased by 400%, according to Yotpo.
On the referrals side, the whole process was rendered much more streamlined. Customers can now refer friends via email and SMS, eliminating the need for coupon codes by allowing referrers to accumulate store credit and redeem it directly at checkout. "Our goal with referrals was to keep it simple, deploy the program in the highest quality locations onsite, and make it really easy to share and redeem," said Richey. Yotpo says that customers have since been sharing the brand much more effectively and with the right people - in the first three months of launch, 22.3% of those customers who clicked on referral links went on to make purchases, and many of those referred customers ended up becoming repeat customers.
Today, no company can make, deliver, or market its product efficiently without technology. Fast-growing startups like ThirdLove have technology bred into their bones, and it's exciting to see how the company is disrupting the bra and underwear industry with its innovative use data, machine learning, and tiered loyalty and referral programs. And there's still more to come. In February, the brand announced that it had raised another $55 million in funding, bumping its valuation up to over $750 million. Zak said the money will be used to help ThirdLove add even more bra sizes (beyond the 78 that are currently offered) as well as grow into three new areas - retail, international markets, and category expansion into sectors such as swim and athletic wear.
"This new funding round allows us to continue delivering on ThirdLove's mission to create a bra for everybody," said Zak. "We are more dedicated than ever to giving all women the level of choice they deserve."
You can hear ThirdLove's Co-Founder and Co-CEO David Spector speak at eTail West 2020, taking place in February at the JW Marriott, Palm Springs, CA.
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