The Modern "Buyer Brain" 🧠 - How Shopify Brands are Evolving to Serve the Customer of the Future.

33:52Is social media still doing what it was doing before as a kind of powerful player? You've talked a lot about, obviously, advocacy, like customer advocacy as a powerful tool, if you can pull that lever really expertly. What is going on with AI that is, if I'm a subscription marketer, new in my job, and trying to download everything you've got to make me really effective. Should I be looking at AI and whispering AI up the boardroom sort of journey saying this is going to be our big play? What excites me about AI isn't necessarily replacing humans. And it is exciting that it speeds up processes. I use it on a regular basis.

34:37But I think AI acting like a digital concierge when you have a subscription or when you're a member I think that's what's really interesting and has so much potential. And we're dabbling with it at Bold, like we're a customer who subscribed to a specific product. We use AI to recommend certain products in their customer portal and in their upcoming emails and every subscriber gets a different recommendation. but when a customer feels i mean there's a ton of data points that personalization the effect that it has actually i had a couple stats like it's something like yeah 80 of customers are more likely to buy when there's a personalized experience versus not and 76 of customers subscribers actually get frustrated when they feel their subscription isn't personalized like they expect it actually i was on amazon a couple days ago i was i buying oh yeah i was buying iphone cables, like charging cables.

35:35I had it up on the screen, but I didn't click add to cart. And then I opened Amazon and I just, in my head, I just expected it to be on the homepage, continue shopping. I didn't, I, and it was there. And I just expected that because Amazon is great that way. If you look at something, it stays on your home tab. Right. And I, if it wasn't, I would have been slightly disappointed. And I think with subscription and membership, AI actually has a ton of potential to really improve that experience so you look at certain products on the site now imagine having that product recommended in your customer portal for a discount on your next upcoming subscription things like that but it still has to be driven by psychology which AI currently doesn't really have correct I do no I mean I think AI can definitely help I think I mean the psychology when it comes to like monitoring behavior making I mean, we're dabbling in this as we speak right now with can we predict can we predict when customers want their next order?

36:36Right. Subscriptions are great. But do you actually need your protein powder every 30 days? Do you actually need it or do you need it? Can we do frequencies vary? So it's not just products, it's frequencies. It's a number of things. And so I think I can definitely improve the member experience from products, from frequencies to a number of things like that. So I'm, yeah, I'm like you. I do think it's, I wouldn't over, I wouldn't put a ton of weight into it yet. I am very excited about what it will do. And we're investing heavily into it in our products. But I still think at the end of the day, like crafting great membership ecosystems is the most important thing.

37:18And then AI will improve that. It's not going to do it for you, but it'll improve the experiences that you've created. And is that ecosystems bit, why you love subscriptions so much and why you think it can be an answer for any kind of brand looking for new sort of predictable growth i mean because if if so we're talking about a real cornerstone in the new we're talking about consumers moving further and further away and putting more distance between themselves and a legacy retail model subscriptions you kind of when you talk about subscriptions, you take it away from a kind of really static, blunt, I signed up for this a year ago, I got it through the door, I just can't be bothered with, it's more hassle for me to go on, whatever.

38:07You turn it into this kind of, when it's used well, this ecosystem that's built around me and built around my needs, and they're always surprising and delighting. Is subscription your retail model? Is it what you think can be the answer for anybody? I would say, yes, I would say, well, membership. We use the word subscriptions a little bit interchangeably. I want to just clarify a little bit of this. Like I see someone listening might say, I don't sell subscriptions. I don't have a product that's replenishable. I still think that the concept of membership is important for every direct to consumer brand to get right.

38:47I think it's critical. Now, subscription is often a component of that. A concept of VIP, a concept of rewarding customers, a concept of access, a concept of all these things. I love subscription because I think it's one of the only mechanics in e-commerce that truly creates a good experience on both sides. What I mean by that is if I only sell products one time and all I'm and I know brands that do this. They actually I know personally a couple of people that do this. They go to China every year and they go to these fairs. The Canton fair is one and there's a few others and they source products and they'll find something like a USB fan for your phone.

39:28You plug it in and you can put it on your desk and it'll fan you or something like this. And they white label it. They get they buy it for 70 cents. They put their logo on it and they put some packaging. They get a whole bunch of influencers. They put about a million dollars of ads on Instagram. They'll pump it out. They'll sell it for$39.99 each or buy two for$59 or buy three for$65, get whatever. You see these ads all the time and they'll make$10 million in a year. And the next year it's another product. And if you've ordered from them, you'll order it and you'll always know that it takes five to six weeks to actually get.

40:03And it's not coming from like FedEx or UPS. It's all coming through a container and it's a horrible experience. They have no customer service. It's like arbitrage on one-time products. find something, pump a lot of ads into it. This is not a great experience for a customer. Like I've been a sucker of these at a few like midnight Instagram scrolls. I've seen something. I bought indestructible shoes one time. My wife still laughs at me. It was like something like a nail can't puncture them and all these things. I ordered it and the things feel horrible to wear and took six months to come, but it's a horrible experience.

40:35Subscriptions, like you can't do that to a customer. Like you can't have an experience like that with a customer and expect to have a subscription company. It has to be the first time that product comes. It has to be magical. The onboarding has to be great. It has to be on time. It has to be as promised or like you're never going to get to month two. And so it's engineered to be a good experience for customers and for brands. Like brands love the long-term predictable recurring revenue and customers love the long-term predictable relationship and the long-term predictable experience. So I love subscriptions because it really creates like I love being a subscriber.

41:14I love being when a brand knows me. I actually like it. I love the recommendations I get. I love being a part of a number of subscribe to everything because we have a subscription products. I'm always subscribing. And I the ones that do it well, I genuinely love being a subscriber. They're easy to manage. They're flexible. I get all kinds of insider perks. I'm members of communities and I love it. And so when it's done well, it's a great experience on both ends. And that's why I love subscriptions so much. So then talk to me about loyalty. If we were to try and define what customer loyalty does and can mean in 2025, if it used to be all about points and discounts and brands are now experimenting with memberships and VIP programs, where are we up to with what loyalty really means in e-commerce?

42:05like how has it changed and where are we at yeah i mean i don't think this is going to be a shocker to anyone that say loyalty isn't about loyalty points anymore i think we've hopefully everyone's kind of moved past that and we understand that i would say like even just a few years ago people would say it's not just about points it's about getting customers to repeat buy and repeat purchase and i actually think it's not even that it's when customers they choose your brand over and over even when they don't have to, but it's also when they choose to engage. It's when they choose to advocate your brand.

42:42It's when they choose to be a part of your community. And so I think it's actually interesting. I don't think a lot of the measurement tools are out there yet for measuring true loyalty. So I can tell you what it is. You know, when a customer leaves a five-star review for your products on multiple places, when they refer a friend, when someone posts about it on social media and they comment on it, that in a good way, when you post something and they let, then they're liking your post when they're active in your Slack groups, your discord groups, your Facebook groups, when, you know, all these different touch points, when they engage, that's a loyal customer, right?

43:20It's tough to measure some of that, right? So we kind of default to, we measure repeat purchases, which is a loose proxy. We measure customer lifetime value, which I still think is important, but it's not a true indicator of loyalty. And actually, I think you said this to me one time, you have six pairs of the same pairs of Converse shoes. And it stuck out to me when you said that, because you said you would switch in a heartbeat if you found another pair just as comfortable, which is they fit. I don't, you might not be loyal to Converse. It's just, you found a pair that fits and they look good, but are you engaged in all their communities?

43:56Are you going to Converse events? If you see a friend wearing Nike, it's not like Ford versus Chevy. Oh, you're wearing Nike. You probably could care less. You're just like, you like Converse. They fit you. But someone who's truly loyal, well, who sees someone wearing another shoe type might even actually be like, hey, you should try these. I feel like that's a great example for this. Yeah, I feel like I'm stuck between believing in loyalty to brands and not. I think that possibly one thing you've hit upon is that all the best proxies we have for measuring it feel to me like they're too blunt.

44:32They just, if they were to write to me and say, thank you for being one of our loyal customers, it's almost, I'm not, it's just convenient. It suits me to Converse All-Star. I've had, like I said, in my wardrobe since I was a kid. And I think, I happen to think they made me look 10 years younger and about seven years cooler. but I reckon like I went to a football match the other night I was in Liverpool my hometown I went to a Liverpool football club match first game of the season very rarely used the club shop because like I'm a 50 year old man who doesn't look like an elite athlete so wearing a shirt isn't going to be a good look on me but I'll wear I'll buy the kits when they're cheap when they're being replaced and they're going cheap I'll buy the kits for my kids if they want right but the other day there was a whole bunch of things that came into it.

45:19Firstly, first game of the season. Second, one of our top stars died in a car crash this summer. And there was a lot of emotion around the game. Thirdly, they've just switched from one kit supply to another. And the kits and the training kits this year are absolutely gorgeous. So I bought myself a tracksuit top, like a zip-up tracksuit top, three stripes down the side. It made me feel like the sort of stuff I used to wear in the 70s and 80s when I was a kid. And it looked great on me. And I'm like, so if I'm loyal to a brand, it's like I'm loyal to my family, then I'm loyal to Liverpool Football Club.

45:52Like you can't get me off that. Am I loyal to the rest? Or is it just, I don't know, I'm struck between it. But then it might be because like you said, if I was on fan groups, and yeah, you could call me a loyal customer if I was Facebooking, social metering, trust piloting, trip advisering and referring, then sure, I'm a loyal customer. Right. I think the fundamental problem with loyalty when it comes to brands is true loyalty. If you think about loyalty, if you think about someone you're loyal to, it's often because they've done something for you. If someone sacrificed for you, if they've gone out of their way for you, if they've been extremely kind to you, like someone who maybe you fought with or you went to war with or they sacrificed their time, a coach or something.

46:42Like that's really one of the only ways to create true loyalty is when someone does something special for you. It's very hard to do as a brand. Now imagine, because it's all transactional. It's like you do X, you earn these loyalty points. We shouldn't even call them loyalty points. It should be kind of more like incentivized points or something. But imagine a human, imagine a girlfriend or a friend or someone saying, if you do this thing, I will give you X reward. I will give you a kiss if you do this or I'll do this. If you're never there's not going to be loyal there. It's transactional. So it doesn't make sense with people.

47:20It doesn't really make sense with brands either. Now, there are some ways I think that are interesting to actually create a bit of a sense of loyalty with brands. And I think I, I always, I tell our customer support team at Bold all the time that the best opportunity that we have as a company to build loyal customers is when someone emails in and they're angry on a support ticket. Not when someone's happy, not when they like, when things, when someone installs an app and things go exactly normal, we don't really have it. It's hard to turn that person. And even though we think that's a, that's an awesome experience, it's actually hard to turn them into a raving fan.

47:57But when something goes wrong and you go out of your way to make it right, you will have someone raving about your brand. And I've seen it over and over. And I've seen those when people go and they post on social media. Those are, I tell the story a lot about my, I had a sister-in-law one time up in Canada. We've got a coffee chain called Tim Hortons. It's kind of like Starbucks. And she went through the drive-thru and she ordered drinks and sandwiches. It was kind of like supper. She had a bunch of kids. and so she got her bags and she drove home and opened it up and I think there was like the donuts were in it but none of the sandwiches but I guess she didn't notice when she was driving and so she got home opened it up and the sandwiches weren't there and so she tweeted something like thanks a lot Tim Hortons like all you had to do was put the sandwiches in our bag now we have no dinner for our kids like some kind of angry tweet I can't remember exactly what it was tim horton saw it dm'd her apologized and asked her where she lived and said we're going to get someone from the store to drive it to your house and they drove the sandwiches to our house and here i am years later telling the story and she's told it multiple times and a when you have some type of an angry customer believe it or not that's the most amazing opportunity to create a loyal person.

49:16B, if you don't have an angry customer, I still, I think you can create these opportunities. And here's a good example. I, we talk about loyalty points. Think about a coffee shop. Imagine a, you know, the punch cards, you buy 10 coffees, you get the 10th one free. When you get the 10th free coffee, you don't go tell all your friends, I got a free coffee. You just, you earned your coffee, right? Now imagine that store had some way of still tracking that you've bought a bunch of coffees or maybe the barista has seen you come in 10 times and or just randomly doesn't have to be 10 it could be on the 7th could be the 11th but imagine you walk in and you order your coffee and the barista says hey this one's on us today you'd be like what oh thank you okay wow i'm gonna come here all the time and tell my friends about this place that's amazing you go home and guess what i ordered my coffee from starbucks and they just gave me a free coffee you would tell everyone but no one does that with the starbucks points programs and everything else when you get your free coffee because it's expected it's transactional and so if you can create ways where you surprise and delight your customers it's mind-blowing the effects that can have not just on their retention but on then the referral rates as well too and i think baking that into your customer experience even though it's planned it feels like a surprise to them so don't say after your third month you're gonna get i don't say it's that protein shake company, you're going to get a free shaker bottle.

50:41Don't say that just on the third month, include a separate box in there with handwritten note. It's actually very easy to do handwritten notes these days. You can tools like handy written. There's a bunch of others that like mechanical pens that write them, put in a picture of your team. This is on us. Thanks for sticking around for three months. We wanted to throw in a shaker bottle for you. Little things like that go incredibly far. One last great example I have of this is Chewy, which is like the dog food pet company what always happens with a dog food subscription eventually the dog dies and when the dog dies what usually happens is the owner forgets to cancel their subscription because it's the last thing on their mind and what happens is they get their dog food the next month and it's kind of a bit of a painful reminder that their dog passed away and a lot of subscription brands maybe won't even refund you they just the customer goes into cancel or they call can you refund oh oh no, I'm sorry, it's shipped, but we can cancel the next one.

51:38And they call Chewy and Chewy says, oh yes, of course we'll refund you. And you know what? Keep that dog food. Don't worry about sending it back. We're just going to refund you. And then the customer feels amazing. Oh, thank you. I don't have to worry about the hassle of sending it back. And then a week later or a couple of days later, they get flowers delivered because Chewy knows the address because they've been a subscriber. They knew that their dog just died. So what they also do is they send a$20 or$30 bouquet with a little note saying, we are so sorry to hear about, maybe they know the dog's name and that nothing will replace only the memories.

52:15Some little nice word and they send the flowers. Like then the customer is a holy cow. Now, what happens to most people that have a dog pass away? Like it's something like 80 % of them get another dog within two to three years. So where do you think they're going to get their pet food? there's no loyalty program in the world that could have earned that than what Chewy did after their dog passed away and so I do think there are things you can do to create a bit of a sense of loyalty even though an e-commerce brand would never die for you or stick out their leg for you like they'll but you can do things to actually surprise them and so if you started to think let's take some of our customer acquisition costs and let's put a budget towards doing kind things for our customers you might be blown away on the effect it has towards actual true loyalty you make me want to start my own business again jay i've had businesses in the past and we tried but i i would if i did i would definitely put like a kindness budget in there and make sure i'm doing things that aren't necessarily expected or counted listen we talked a lot about you and I in the past about the buyer brain and in the last half hour we've talked about psychology and delight and surprise and we've talked about convenience and a different version of loyalty and how that can be created and we talked about business models and how it works and the maths behind the like complex maths behind compounding future CLV and all that stuff tell me what you think about how do we define the modern buyer brain if you were talking to a non-marketer right now or somebody with kind of led very much by the left side of their brain for example you they might be and they're looking up from their spreadsheets and their sort of analytical reports to listen to you they might assume that if you if i said to you now to tell this guy how consumers think what do they typically expect of their preferred retail brands they might just walk away with a kind of sense that okay so what i've taken from jay today is that the consumer is incredibly entitled really fastidiously concrete in higher expectations every time never lowering them and want something for nothing and blah blah blah blah blah that it can't be that simple right the buyer talk to me about what bold might describe with all your beautiful experience of thousands of brands running these great programs.

54:51What is the buyer brain like these days? I think first and foremost, it's important to know that the modern buyer brain is overloaded. It's impatient. It's craving connection. I think consumers don't just crave convenience anymore. They expect brands to know them. They expect brands to get ahead of their needs. I think it comes down to people are so busy. They're almost even frustrated when they come on a site and it doesn't feel personalized. They expect it. I do think that's why subscriptions and memberships really do resonate with the modern buyer is they remove friction. They simplify decisions.

55:37They make people feel like insiders. And I'm talking about subscriptions done well. There are subscriptions that are not good at all and they're very rigid and they're hard to cancel and they're not good at all. But a good subscription, I think, does really tap into that fatigued, overloaded, impatient, tired buyer. And I think the more you can do to remove friction, make things as easy and convenient as possible, is probably if you want to talk about manufacturing loyalty, that's maybe one of the most important things you can do. If it's why do you open Uber instead of Lyft or why do you open DoorDash instead of Uber Eats?

56:23I don't know if those examples are true or whatever, but there's always things in your life that if you think about it, when you need to take a note, you open a certain app versus a different app because there's just a little less friction there. And that one extra little bit is the decision making factor. And so it's really important to get to know your customers so you can personalize emails. If they open one email and if you are a man and let's just say it's a athletic clothing line and all the things are for women, you might not open their email again. But you have the opportunity to know that customer when they sign up for your email.

57:03You can look at products they're shopping in and auto tag them in your emails, whatever tool you're using. You can ask them questions. You can have questionnaires. It's very easy to personalize things, but you get it wrong once or twice and the customer starts to perceive friction and fatigue starts to set in and that modern buyer brain will go the least path of resistance. And so I think if you want to think about what consumers expect, the modern buyer brain like now, they expect personalization. They expect control. They expect recognition is actually a big one. and they expect also purpose.

57:40I would say that I think they, they expect alignment with a brand's values, whatever that is. And there can be different values. I thought there's not like one overarching one that's right, but they, there's been a lot of data showing that, especially in the younger generations that showing where you donate money to or charities you're aligned with can have a bigger effect on conversion than discounts. actually we work with a company that does when you check out on the thank you page you can pick where you want it's 10 or 20 of your order to go to and you get to pick the charity and they did tests where they sent emails to like 10 ,000 customers got an email that said 10 off these products this weekend and the other 10 ,000 got an email that said this weekend any orders you'll get to pick 10 of your order will go to a charity of your choice we're working with these five charities and you'll get to pick.

58:37And the ones that said you get to pick where your percentage of your order goes to converted more. So people care about that. There's a lot. I think though that's, if I had to sum up the modern buyer brain in a few words, it's fatigued, it's overloaded. It craves ease. It craves the least passive path of resistance. It craves alignment with values. It craves recognition, badges, like nothing, nothing is more valuable than back to the Louis Vuitton purse example. All that is, is a badge. It's like, why do airlines name silver, elite, platinum? They could name their levels, level one, level two, level three, but we crave recognition as humans, right?

59:19So products are a form of recognition when you buy something, it's a status symbol. So I think that's what I would say about the modern biobrain. And when you talk about control, there's something about being heard, listened to, and generating the response you crave when there is a problem, right? I mean, I've been part of a subscription program or two where it's impossible to find somebody to talk to when you want to change or even, not even just cancel, but actual question something. And I was part of a, in one job, I was in New York every, for a week, every month for about two, three years.

59:53And very quickly went up the Virgin Atlantic loyalty levels from red card to black card to silver card to whatever. And the one time I really needed to get in the lounge because I was absolutely exhausted and the flight had been delayed, I needed to sit somewhere and be in peace. I couldn't get into the lounge because the last two, three months we hadn't flown because there wasn't a need. And my silver card that I had in my wallet had only been, it was based on a constant accumulation of points yeah and i was like you're talking to me about points i'm talking to you about sleep they wouldn't let me out i couldn't i had to sit like in the concourse with people and children and noise and on a chair that was built out of stone and i'm like dude we're talking about two different things i've been flying with you now for i've literally been flying with you for two and a half years month in month out what are we doing what are we doing here yeah you know what that's the difference.

1:00:51The difference in that is principle versus policy. And I think good brands have principles, bad brands have policies. And so airlines is a great example for this. I one time remember asking an airline for the flight attendant for another pillow. And I, there was like a whole stack of 20 pillows up top. And I said, can I grab another pillow? I need another one by my head for the window. And she's, I'm so sorry. It's our policy is one per person. And I was like, but there's 20 up there and no one else is using them. I'm sorry, sir. It's one per person because they have that policy. But if they had a principle that if the principle is do everything you can to make a customer happy, as long as it's not at the detriment of another customer, that was a principle that a would empower them to make decisions, the flight attendant that would keep me engaged with the brand, right?

1:01:50Like it's empowering for the employees and it builds relationship. And so I always believe in principles, not policy. So there's a lot that could be said about that. But when as much as you can as a brand, I think even like with customer support, if you have a principle that you can do anything, Zappos, the shoe company is actually kind of like where I don't steal the idea. I got inspired from because they take it to the extreme. like they have a policy that i think it's like each customer service rep can spend up to five hundred dollars to make a customer happy so they've been famous for they've sent cakes they've sent they they've had like famous if you just google like zappos for those who don't know it's z-a-p-p-o-s yeah google zappos customer service stories and there's a ton of them where like people have talked to the customer for nine hours on a call because they found out like they called to order shoes, but they found out that there, someone died and they ended up talking and this person was lonely and didn't have any friends.

1:02:47Now nine hours on a call, like you would say that's like, if you talk to someone for more than 17 minutes, we are losing money as a company. That's all we can afford. Our margins, like nine hours on a call, we lost money on that customer. But if the lines aren't busy and if there's, if everyone's getting serviced, what's better talking to the customer or just sitting there waiting for the next call to get in. So they understood that and they grew as one of the fastest growing shoe companies in the history and they were later acquired by Amazon. I think that goes to policy versus principle. When you have good principles, things like that should never happen.

1:03:22Like that experience. The people that come up with these amazing principles, are they just really smart or are they brilliant retailers? Is this where retail's going? I wonder sometimes if it's, I think a lot of people have the intuition. A lot of people know what's right to do. They know if you're in a meeting and you're talking about a sales strategy or a customer service strategy or how in your heart, like what's right. But you're pressured because you're in an organization that maybe has certain pressures and you have to have certain quotas and certain things. And so if it's, I guess, maybe sad, and this is a bit more philosophical, but like often we have to work within a system.

1:04:11And so we might know actually amazing things to do, but we can't. We're structured in it. And so maybe a lot of times when you do hear about these companies that have really done unique things, it's when like the founder has complete control over the board. Like they've got veto power. They've got, or they're just, there is no, they're not publicly traded. they can make decisions like this they can do things like unilever could never do something like that they have to like tight numbers they report every quarter but a private company could and that's often how they like beat beat unilever and then unilever will end up acquiring them but that's like it we see this repeat over and over and i think the dollar shave people and totally yeah i mean unilever would have never come out with the commercials that they did 10 years ago with people in gorilla costumes and different things it would have been like we can't risk that we're a publicly traded company we have to just be let's let the other companies do the risky things and then we'll acquire them if it works right so i don't know that it's necessarily that it takes some great level of brilliance to know and to try i just think it takes the freedom and like to empower people i sometimes say to people at our company i if i said to you mark if you worked at bold and i said mark i give you full permission to just be awesome to do what you think is awesome.

1:05:34And I think sometimes people just need that permission. I think they just need to know that you, we, I mean, how many times have you gone to a party and you come home and you question yourself, did I say the right thing? Did I do the right thing? Oh, did that come across the right way? You don't sleep at night. You wake up in the morning, like, oh, I probably said the wrong thing last night. Where it's human nature. We question everything we do. But if I just gave you permission, like Mark, just be as awesome as you want tonight or whatever do be you and if like you can apply that to how you work i think i think people can do amazing things i love that i i would well firstly yes thank you i'll take that you included listen we've talked about a number of things jay we've got 10 12 minutes left now i want to we talked about the buyer we talked about the potential for subscription programs to build and future-proof ecosystems, retail ecosystems.

1:06:28We talked about the psychology of status and belonging a little bit. I mean, maybe there's a bit more there. And we talked about kind of fatigue with subscriptions and how subscription programs can differ. One's about making sure that you are building heart and instinct into the relationship, and others are just about points and deadlines. And how are you seeing subscription models of, certainly of, let's, you know, any of your clients, increasingly engineering not just retail and how retail works but their own customers retail habits are they actually changing the customers in terms of the way we purchase and the way we perceive and giving me more you've talked about making giving me the permission to be awesome right giving me the permission to upgrade or go and talk to go and talk to somebody because you did some amazing zapos or any of them or chewy did any of these flowers or the cakes or the delight surprise are you finding that there's a power in membership models and subscription models to actually change customers intents increase their intent or broaden their intent in terms of if you read mark ritson and some of the big marketing professors most of them would call bullshit any time you talked about a relationship between a brand and a person as in they go come on there are no relationships it's not people it's not brand love it's like brand when i think of it and when i can be bothered it's not the same thing but what you're talking about is about as strong a relationship as any it's give and take and it's like changing my habits changing my intent the way you describe it membership models have that power yes here's maybe a soundbite that I would say is subscriptions don't just sell products, they engineer habits.

1:08:20I really believe that. And the data shows it because we know that customers who are part of a paid membership program, this is with restoration hardware. This is Amazon. This is like a number, like many companies have reported roughly the same numbers. They spend on average four times more than non-paying subscribers. So yes, it's engineering. They are, according to McKinsey, 63 % more likely to choose your brand over a competitor when they are part of a paid membership. And that's brand affinity. That's removing price sensitivity. That means if they're part of your paid membership subscription program, and now there's another product on your site or another offer, they are 63 % less likely to compare you to a competitor to go out and search.

1:09:16They'll just buy it. So yes, it's engineering habits. They are, I believe it's 53%. That one, I don't know exactly off the top of it, but it was also in the McKinsey study, but more likely to refer a friend when they're part of a paid subscription. So I would argue that, yes, I mean, I would agree. I mean, to the point you made, maybe it isn't true loyalty, but it is definitely engineering habits. So I would say subscriptions turn buying into a default behavior and they train customers to think in ecosystems and make your brand like the first stop when they have something else that they need to buy.

1:09:55So I think it's not just a revenue model. Like it really is a behavior model. And if you can, I mean, if every time that customer every month, there's a transaction from you, they're buying from you, They're engaging with you. They're accepting offers from you. They're like, they trust your shipping. They know that you know their address. You know how to get a box of them that you're going to be okay if they need to return something. Like it's building trust. It definitely is engineering habits that will affect much more than just the subscription. I really believe that. And if you want to take it one step further, I think if you can layer sunk cost into a subscription, and what I mean by this is any type of a paid membership where if you don't use it, you lose it has an incredible effect on on on buying behavior, buying habits or engineering habits.

1:10:53so for example this is a if i earn loyalty points like i'm a member of an airline and i earn air miles i earn air miles with almost every airline i'm not one of those people i generally will fly whatever like time i want to leave and what time i get there and i don't worry too much about which airline i fly i know some people are very much in a certain but versus if i paid let's say a thousand dollars a month to Delta to fly anywhere in the continental United States. Now, if I book with United, I don't just feel like I'm not earning my Delta points. I actually feel like I'm losing money, right?

1:11:30Let's say you have a membership program. Maybe you do a, this has a model like this where you pay, I think it's$50 a month and you get a$75 shopping credit every month versus earning points. Now, if I pay$50 a month and I get$75 shopping credit, now, if I go and I buy something at Nike or Lululemon, I actually feel like I'm losing money because I'm not using my money that I'm earning over here. There's a lot of data about, it's called the sunk cost fallacy. People make irrational decisions based off of costs already incurred. People say it's why some people are stuck in a marriage too long because they, well, we've been together for X long.

1:12:11It's why people don't wear 80 % of the clothes in their closet because they bought it. They don't and throw it out even if they haven't worn it for two years they paid for it it's why we struggle with it at bold if we've been working on a product for a year but now a new opportunity comes out like ai just comes out there's the we should work on something new but our brains go to well we've been working on this for a year we've invested in it there's sunk cost and there's a it's a fallacy and it means that people make irrational decisions based off sunk cost so any way that you can get your customers to have sunk costs to earn is a huge effect on buying behavior.

1:12:48And I would argue it's one of the most, it is for sure the most untapped buying behavior that affects retail purchases that 99 % of brands are not tapping into. They're starting to, but it's very early. So brands tap into status. I mean, we've tapped into status forever. It's why you buy. We've tapped into urgency, like limited time offers and lineups and drops and limited. We tap into FOMO and we've tapped into all kinds of other things that make people want to buy. But we haven't really, brands haven't tapped into sunk cost at all. Because it's been hard to do. Membership, paid membership is one of the, you might call it paid loyalty, paid membership.

1:13:31It all kind of falls in this bucket. But as long as it includes sunk cost, it's one of the best ways to tap into it. And I think there's a huge opportunity right now if you can tap into some costs to affect buying behavior in a very powerful way. It's one of the last psychological reasons people make decisions that's not being used for retail yet. Are you, if you've got a clear vision of where, if we were to fast forward to 2030, what loyalty and membership programs could look like, what are the bold bets or innovations shaping the next era of e-commerce and loyalty? I mean, I think 2030 loyalty will definitely not just be about earning points.

1:14:14It'll be about earning identity. Memberships will be literally like living, breathing ecosystems, fully powered by AI, wrapped in community, aligned with values that we talked about. The brands that will be winning, they're not going to just be selling products. They'll be selling belonging, status, purpose, and powered by with AI and all of this. I think it's going to be incredible experiences and relationships that we will have with brands. Subscription is a tool. Subscription is the foundation. It's the foundation of the building, but I think there's going to be so much more wrapped around it.

1:14:53truly like hyper-personalized AI driven memberships built on top of subscription that truly encompasses community relationship belonging status purpose like all those values we talked about I hope it looks like that because that would be great experiences before we talked about the new marketing skill set that this might require I'm actually now thinking more broadly with everything you've said that there might be a recognized skill set or character or persona of business person needed to make this stuff mainstream so bear with me because this might sound a little bit you can call it bullshit if it sounds a little bit too fluffy but it's if you now now and again i see some marketing books or business books on the shelf here that my dad gave me or from the local secondhand bookstore down the road i wanted to buy something the other day about if you read this everything there is to know about the music business and it's uninterested in and it's like how to go from making music in your bedroom to getting up there right but it was 2014 i'm like no i can't it's two pound 50 i should get it anyway no because it's gonna be out of date like more that more has happened to that business model in the last 10 years than probably happened for half a century.

1:16:15So there's nothing in there that's going to be of use, right? So I'm thinking, if you looked at marketing and business models from a book from 1985 or 1995 even, I fear that you're learning almost a different industry, whereas 2030 membership model retail requires emotional intelligence. It requires understanding of what costs to incur in order to build up costs for the future and it's about partnerships it's got a very different understanding of brand and loyalty do you think there is a specific business skill set that we need to incorporate into our firms or already are for some businesses that is that differs from kind of the sort of thing we see in 1980s and 90s new york business films like all those tropes about huge silver towers and big lapels and barking orders in a boardroom are we talking about a different persona of successful business person yeah i mean like there's a buyer brain is that also a business brain yeah i think there's probably been some great books written in the past that like fundamentally the fundamentals are sound and true but there's probably been some that are very much build a product, build a sales org.

1:17:38This is how you expand your sales org. Go out, sell, close. It's all about the push versus pull. I think, I had a conversation recently with two investors that they acquire e-commerce brands and I asked them, what are some of the most important things you look for in a retail brand when you're acquiring it? It's e-commerce brands. And they said the most, one of the most important metrics is the reorder rate. They look at reorders per customer, value of reorders, reorder frequency. And then they look at, sorry, drawing back on the acronym, NDR, net dollar retention. So once you acquire a customer, do they become more valuable over time?

1:18:27So what is the, so for example, let's say you acquire a hundred customers in a month and you lose 10, you have a 10 % churn, but 10 % of your customers also upgrade. They spend more, they have an add on product they buy. So your net dollar retention actually goes up. So you might have, so a positive, so anything over a hundred is a positive number. If you have over 100, you have an extremely healthy business because it means you can acquire customers and you can take a dollar and turn that into$1.10 and$1.20 and$1.25. And you have a business that can grow the value of a cohort of customers. And then reorders isn't something like if I asked 10 brands, what's your reorder rate?

1:19:11And it's actually interesting because I'm doing this right now with a whole bunch of merchants of ours. And we're going through because we're building products very specifically to drive reorders. And I asked them what their reorder rate and not one has known, not a single one. In fact, I would say 95 % of them didn't actually even know how to find the reorder rate. So I go in their analytics and I show them how to run the report to see what their reorder percentage is, how many reorders per customer, what's their average reorder value, reorder frequency. They don't even know how to report that.

1:19:47But yet, it's one of the most important metrics that investors are looking at when they invest or acquire a business. It's the true sign of a healthy business is when a customer chooses to come back to you over. and then when they do choose to come back to you can you increase their value over time and i mean yes a hundred percent it's i mean i tell you right now it's not just in the future that we need this in our marketing teams we need it right now because a lot of brands i talk to they don't even know a if i said what's your net what's your ndr what's your net dollar retention they say what's that in fact i was at a conference two years ago and i asked everyone at the beginning there's about 100 people in the crowd and i said tell me what's your most important metric and people would say LTV, churn, whatever, CAC, whatever, threw out all these numbers.

1:20:36Not one person said NDR, net retention, net dollar retention. And then I asked, I said, well, does anyone, how about net dollar retention? I said, no one even knew what it was. And then it was one of those ones where I was doing a live podcast on stage. And so we talked about net dollar retention a bit in the show and I had someone come up to me after and they said the show was like it was like three or four days long and they came up to me and said that was the most important 30 minutes of this entire conference he goes I had never thought about that and we I ended up seeing him again the next year and he came back to me and he actually he saw me he made a beeline right towards me and he found me and he said that has made the most impact on his business of anything he's ever picked up at a conference and it's not hard it's not confusing but we people don't have resources and time and people dedicated to it so yes i do think we need i don't know what the name of the people are for that role or department but it is extremely important not just in the future like i think right now it's amazing by the way you'll be happy to know that orbital x runs on a the most important single metrics that we report every month and every year is ndr nice nice yeah guys we are good that is everything i am i have to go and get my kid from coding camp but i feel like we've covered everything jay is there anything else you feel like you want to add that you feel like we didn't cover at all or enough i think we covered a ton this is this was a lot of fun i mean i would say the most important thing right now is that everyone is thinking about membership at some level and whether you have products that are recurring, whether it's whatever it is, start thinking about what could membership look like for your brand, even if you're, if you're not, what could a membership ecosystem be?

1:22:38What value stack can you, could you offer? It's going to look different for every brand. Some will be able to do live events. Some will be able to do once a month zoom calls with the founder. Some of them will be able to do partner perks. Some of them will be able to do exclusive content. Some of them will be able to do access to online courses or communities. Some of them will be able to do early access to products. It's different for every brand, but start thinking about what could it look like whiteboard it and start thinking about what could a holistic membership program be for my brand whether you have a one-time product or not even if you have a one-time product remember it can be earning credit every month it could be vip status just a number of other things if you don't i think you will really struggle in the years to come because a lot of the best brands are all investing and building out membership and it's very hard to fight from behind i think right now there's an opportunity to get ahead of it where people are only going to sign up for one membership of one certain type of product.

1:23:43And it's going to be very hard to do that in a couple of years. But right now you've got this window of opportunity where you can get them locked in and start driving more and more value and growing it. So I would just really encourage everyone to get ahead of it. Love it. Jay, I think you're amazing. Well, that was a ton of fun. Now, I just want to mention again, I mentioned this at the beginning, But just in case you missed it, we created nine chapters based on this episode. We covered a lot. And this episode, I think, has the foundations to set you up for success over the next five to 10 years as that customer buyer brain evolves.

1:24:21And so we broke this into nine chapters. We kind of took out key points from this episode and we went deep on it and also gave clear, actionable advice and takeaways that you can implement like literally today if you want to make sure you win and stay ahead in some of these areas. So over the next week or two, we'll be releasing those nine episodes. I don't know for sure if they'll be exactly consecutive. There might be some other guest interviews in between, but each one will clearly be labeled chapter one, chapter two, chapter three. So make sure you listen to all of them so that you can be ahead of brands as this customer buyer brain is evolving over really the next five years.

1:25:02It's right in front of our eyes, to be honest. It's evolving as we speak. So thanks so much. And if you enjoy this content, please leave a five star review for us in Apple Podcasts or Spotify or wherever you listen. It means a lot. I read every single one. And I, in fact, the other day I was at dinner with my wife and someone left an amazing review. Actually, it was a comment on one of the episodes on Spotify. And to the extent saying that I love your podcast so much. I'm working a nine to five, struggling to also build my store on the side. And your store keeps me motivated and gives me ideas.

1:25:34And like, that is exactly why I do this. It means so much to me. Thank you so much for all the kind words I've been getting emails and such positive feedback. So it means a ton. And the reviews just help the episode get found by more people. Thank you so much. And looking forward to seeing you on the next episode.