Top-Shelf (And Thirdshelf) Loyalty For Retailers

Loyalty is the Holy Grail of retail, with happy customers retained and spending all the while on goods flying off brick-and-mortar shelves.

For many small merchants, that grail proves elusive, as finding out the answer to just what customers want before they vote with their feet needs good data taken into context.

But in an interview with PYMNTS’ Karen Webster, Thirdshelf Founder and CEO Rami Karam said that many merchants lack the ability to grab data in the first place — amid a sea change of how businesses and individuals interact.

Karam said that the changes happening in retail are similar to what is going in software.

“People used to buy software upfront,” he noted, adding that software in that form was a transaction-oriented business. Then came the advent of service companies, such as Salesforce, he said, and those firms brought on the Demand-as-a-Service model. Then, the subscription-based model, such as that employed by Thirdshelf, also evolved.

“What that did,” said Karam of the evolution, “is … shift the risk from the customer to the vendor.”

Therefore, he added, today, it is the vendor that carries the cost of acquiring and maintaining that customer, and the vendor must deliver on its promise of ROI and value or the customer will cancel.

In retail, a similar shift also has been transpiring, from transactional relationships to relational. The shift has been spurred by online technology and retail channels, he said. The metrics that retailers use to measure their businesses are very much customer-centric, said the executive, who added that such metrics span the cost of acquisition, the lifetime value of customers, how many months it takes to pay back on a customer and so on.

All the while, data is accruing as consumers conduct online shopping, he noted. As a result, eCommerce firms are able to take that data and use it in an attempt to maximize the value of their relationships.

Overall, noted Karam, brick-and-mortar remains relatively healthy among several verticals and still represents the majority of the retail market. Physical store operators that have been operating for a couple of years tend to be healthy but may not know specifics about their customers. To that end, Karam said, Thirdshelf allows those operators to begin to collect data, in-store and online, through several channels, including at the point of sale, through eCommerce and through incentives across those channels.

After all, he said, the traditional loyalty program can be thought of “as an exchange of value for information.”

The firm is also looking for ways to get the data collected through payments platforms.

The first step in working with merchants, said Karam, is “tagging transactions” — in other words, attaching to those transactions a customer ID, something that can be done through Thirdshelf’s technology. That tagging comes up swiftly from a 15 percent “tagging rate” to as much as half, and Karam stated that many customers are able to get to the 95 percent level.

In a series of use cases, Karam noted that, for customers interacting through social media, for example, through Facebook or Twitter, the merchant “has to create an incentive” to get them to sign up and to set up promotion via a landing page with Thirdshelf. A customer then interacts, and Thirdshelf collects the customer information, feeding that data back to the merchant. This is then written into the point of sale. Should one of those customers then visit the store, the data can be brought back up again to the merchant, which can then offer additional rewards to the customer who had participated in the original promotion. Thirdshelf helps train staff to ask for the customer information and offer the incentives. The activation rate for these types of programs, said Karam, is north of 80 percent, and the majority of Thirdshelf customers have between one and five locations.

Customers are sourced, in part, through technology partners, such as Lightspeed, said Karam, with referrals coming as their own customers need loyalty solutions. And Thirdshelf exists as one of the only white-label offerings in the space, which means that, as he put it, “instead of being in the middle of the relationship [between the consumer and the merchant], we are going to be behind the retailer so that they can promote themselves and build a relationship with the consumer directly.”