Ep 640: 2x LTV From Loyalty Without Discounting: Carve Designs on Retention, Direct Mail, and CTV

0:00Hannah Fleming:When we think about our loyalty program, we want to give perks outside of just straight discounts. Really, we want to give our customers things that they find exciting and that they feel are a true benefit of being engaged with the brand. Customers, they want to meet each other because they have this shared interest. They also want to meet people with the brand. They had been investing in direct mail for many years, and it's a channel that as a marketer I've always found fascinating. For us, we really treat it as a performance channel. We do send to prospects, but also past buyers. Every send is a slightly different mix of that.

0:35One thing with direct mail that has helped us grow the program is...

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1:25Hannah Fleming:Back in under two business days with no sales pitch. If you're clean, they'll tell it to you straight. They say one supplement brand they worked with was down$162 ,000 a month to foreign infringers and they helped claw back$131 ,000 of it. Grab your free brand audit report at esqgo.com slash free dash audit. That's E-S-Q-G-O dot com slash free dash audit. The links in the show notes. Hannah, welcome to the D2C podcast. Excited to dive into your experiences with Carve Designs, but maybe we could start with a little bit. You've worked at some really interesting larger brands. Maybe give me a bit of your hero's journey in this D2C space.

2:08Yeah, so I really had an incredible opportunity to work for many years at a large brand called Amher Sports, which is the parent company for iconic brands like Salomon, Atomic, Suunto, Arcteryx, Wilson Sporting Goods. And that really was my foundation for digital marketing and D2C. I was a part of the North American regional team, so our job was really taking global strategy and bringing it to market locally. And after spending the majority of my career up until that point at portfolio organizations, I was working across enterprise-level brands. I was really excited about the opportunity to join Carve, which is where I'm at today, to be really immersed in growing a direct-to-consumer side of the business and just be a little bit closer to the overall strategy of the brand.

2:58Hannah Fleming:Was there anything you had to unlearn from your time at the larger enterprise brands going into an SMB like Carve? Yeah, so I'd say the biggest thing was having to kind of zoom out a bit more and look at all of the pieces and how they play together. Oftentimes at larger organizations, you're a little bit more specialized and focused on an individual channel. And I'd say that in all of my roles, I've had to be a bit scrappy. And I'd say that when you're at a smaller organization, that's incredibly important as well. Scrappy is a buzzword, but also a curse word occasionally when you lean on it too heavily.

3:34Hannah Fleming:But I know what you mean. I think from our pre-chat, one of the first things you focused on when you moved to Carve was rebuilding the retention program from the ground up. What was the state of it when you walked in and what was your thinking about sort of resetting that retention program? Yeah. So when I joined Carve, they were already 20 years into their journey and really had done an incredible job of building a really loyal customer base. They started as a wholesale business primarily. And then during COVID, really, the D2C business started to grow. So they had this incredible loyal audience who was already coming back year after year, season after season to buy more of their favorites.

4:14And with that, I'll say a lot of the fundamentals were already in place to drive lifecycle. There was a really healthy email and SMS program, a newly launched loyalty program, and a really robust direct mail program. However, there was an opportunity to leverage customer data a bit more than they already were when it came to personalization with communication. So one of the first levers that I actually started to work with was segmentation with email and SMS to create more personalized experiences for audiences. And then another really cool project that we did pretty quickly after I started was actually mapping the customer journey.

4:53And I'd say that this is something that, you know, when I've showed this Figma board to some of my peers, they get really excited about it. And it was a really fun project to have in one place our entire customer journey and then start to figure out where maybe there's opportunity to talk to a customer that we're not already doing so in the lifecycle space. Or maybe we're talking to them too much and we actually need to pull away.

5:16Hannah Fleming:When you talk about segmentation, was that around the seasonality, around the products? Because I know you guys started in bathing suits, but have since expanded into dresses and accessories, which probably really helps with flattening out the seasonality issue that you might have. But what was the lens that you focused on for the segmentation that worked best? Yeah, so we started with pretty standard segmentation of RFM modeling. So recency, frequency, and monetary value. And with that, we added a few additional layers. So the customers that are engaging with us more frequently, purchasing from us more frequently, we're going to have more touch points with them and back off a little bit from those that aren't purchasing as frequently because we know that that just clogs up their inbox and can potentially create an even worse experience with the brand if you're getting too much communication from somebody.

6:09So we really started with that best practice. And then from there, we played around a bit with purchase behavior specific to categories. So if somebody did purchase one style of bathing suit or one style of denim, and we really thought that they would like a different style, we use segmentation to try and move them through the journey and get them into a different product. Some of this was done on the campaign level, and some of it was done through automations.

6:36Hannah Fleming:And then you found that the specific product that someone buys first can predict how valuable they become. This is something I hear all the time where it's like you might even have a product that converts best on the front end, but doesn't lead them into the most valuable customer journey. Talk to me about what you discovered and what this ended up looking like on your Figma board. Yeah, so we worked with our CDP partner at the time to dive into customer cohorts based on purchasing categories. So what category did they first come in through? Was it swim, dresses, tops, denim, accessories, all of our different categories?

7:14And we looked at the customer LTV based on that first initial purchase with us. And it became pretty clear that there were a few categories that stood out at the time, one of which was actually dresses and another was accessories. And so what we did with that information was we built, of course, additional segmentation and lookalike audiences that we could use in other channels. So these are high value customers that we can create lookalike audiences for paid, even into direct mail. We pass that data along. So all these different channels, we can use it. It also changed the way that we thought about some of our marketing.

7:50So we wanted to make sure we were always showing a mix of these different products, product categories that brought in that higher LTV customer, instead of maybe only focusing on seasonally relevant categories at the exact time, or kind of, we just altered our mix a little bit to ensure that those categories were really front and center.

8:10Hannah Fleming:And then when it comes to the top of funnel for the business, what does your mix look like when it comes to introducing new customers to the brand? As far as the channels that we utilize, we use connected TV, performance influencers, and then some standard paid channels. But we really think of connected TV as our upper funnel channel. And as far as messaging goes, that is very kind of standard brand building messaging, introducing customers with showing multiple product categories. And we actually lead with our founder. Our founder is the voiceover for our connected TV ads because she's the voice of the business and people love hearing from her.

8:48So we found a lot of success with that.

8:50Hannah Fleming:We just published a piece this week actually about how important in your emails it is to introduce your customers to characters within your business, whether that be the founder and actually sort of experimenting with sending more plain text emails from specific characters. We do it on the newsletter side. Every newsletter comes from me, for instance. Is that something that you guys utilize as well? like the character approach? We speak from our founder quite often from either both of them or one who really leads up the creative side of the business. We do that in email. We do have it in our welcome flow where we introduce our customers to our founders.

9:25And then we've done it occasionally. We sprinkle it in to text-based emails. I'd say we use it a little bit more sparingly on the email side, but where we've really unlocked utilizing that, I don't necessarily want to say character because she's a real person, right? Who is just, she's the voice of the brand. We use founder-led content across all channels. So our paid media mix right now is a mix of influencer content, UGC, and founder content at pretty much any given time.

9:56Hannah Fleming:I also have a note here that you guys have been doing direct mail for such a long time, sending catalogs plus triggered postcards, which I think is really cool. Talk to me a little bit about how you're using direct mail. Is that for top of funnel or for bottom? Yeah. So this is actually one of the many reasons that I was really excited to join Carve was because they had been investing in direct mail for many years. And it's a channel that as a marketer, I've always found fascinating. For us, we really treat it as a performance channel. We do send to prospects, but also past buyers. And every send is a slightly different mix of that.

10:32But we send five to six catalogs a year, and we're both prospecting and retaining customers through that. And then the programmatic postcards is also a really fun space that I've been able to work really closely with. We actually tie that into our win-back campaigns that we trigger via email. And based on the customer's behavior in those emails, it'll either also drop them a postcard in the mail if they haven't converted, or if they convert, then it's great that we were able to do that for a much lower cost via email.

11:04Hannah Fleming:And then it obviously for socials creates a wealth of still content. Having a catalog, you can obviously have a ton of still content for your social buys. But as we all know, the algorithm is pretty hungry for video these days. How have you shifted your content from catalog-based stills to video? Within the last, I'd say, 24 months, there's been a pretty big shift. A few years ago, if you were to look at our creative, most of it would be from our seasonal catalog photo shoots. And while the creative was beautiful, it just wasn't working as well for the algorithm. What we did was one of our leaders had an idea to test some employee generated content, EGC, and it just took off.

11:49It did really well. And starting with this test, we really built out a content pipeline, but we needed that test in order to kind of prove success in order to figure out how to build this pipeline. So now we, like I mentioned, we have a mix of UGC style content. So still on photo shoots, what we've done a little bit differently is our organic social team, they now go to the photo shoots and they're taking UGC style content on the photo shoot. So it's kind of killing two birds with one stone a little bit there. And then with performance influencers, we get really great UGC content. And then the last piece is the EGC.

12:30So that's our founder content. But then also we have a select group of employees who feel comfortable shooting content and it's really authentic for us. So that's kind of how we've shifted to video, but we still use, I will say that with static, we've tested a lot of different types of content with, you know, we can use it with gifts and carousels and we have found some success. Um, so static is still a part of our media mix. It just isn't as much.

12:57Hannah Fleming:Interesting. And then on TV, so it sounds like TV is quite a big part of your top of funnel, which, which is pretty cool. And are you using the same video, that video pipeline that you've sort of created for socials on TV as well? Or is that different content as well? We've actually partnered with an incredible agency who's able to take that UGC and EGC and turn it into a beautiful ad for us, which I think is really important for listeners to hear because when we first think of CTV, it feels like there's a barrier to entry if you don't have this really beautiful commercially shot content. And you don't need that anymore.

13:35There's really skilled agencies who can put together an awesome spot for you that performs really well. And it also gives us some flexibility to update it more frequently because we have that content coming in so regularly.

13:47Hannah Fleming:And then how do you think about attribution with TV? Are you looking for, you're really introducing people to the brand with it mainly? How do you look at it in terms of attributing sales to that platform? Our key metric of success that we are optimizing towards is cost per site visit, we do look at ROAS as a secondary metric, and we're measuring that with an MMM tool. And so we can see both the attributed revenue on our site directly, but then we can also see it on other channels like Amazon. So we can really see the halo effect of connected TV. And it's working. And it's working. Love to hear it.

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15:34Hannah Fleming:We are actually just putting out a report in August that is hyperbolistically called the death of discounting. And it's from the position of using things like loyalty programs more than relying on discounts. I think brands are experiencing a lot of margin pressure across the board right now with rising costs and potential tariffs and all of these type things, the straight of Hormuz of all these things. And so I'm really interested in brands that shy away from discounting and maybe lean more into loyalty. Talk a little bit about your approach at Carve with the loyalty program. For us, when we think about our loyalty program, exactly like what you mentioned, we want to give perks outside of just straight discounts.

16:18Really, we want to give our customers things that they find exciting and that they feel are a true benefit of being engaged with the brand. So outside of just discounts, we lean into things like early access for new releases, early access for the few sales a year that we have. They get notified first. Opportunities to give us product feedback and, you know, hopefully eventually even more in-person opportunities. But I think loyalty programs are in a really interesting space right now. And when I look at some peers, you see peers who aren't even doing any discounting that can really have those in-person activations to bring together their audience.

16:57And I think that that's the future is making your loyal customers feel a part of the brand in whatever way is attainable for you, but also is natural for you. So, you know, whether that's bringing your most loyal customers to a music festival, if that's really connected with your brand or in to try new product and give feedback directly to the product designers, we want to think about it in that way instead of just straight discounts.

17:24Hannah Fleming:I love the idea of bringing people together in person. I think that's a theme across all brands that I talked to and what we're doing at D2C as well. People are really hungry for in-person connection, community, things like that. Is that something that you've tested on the loyalty side is bringing people together in person? At Carve, we haven't tested that just yet. In previous roles, I have and have had success with that. I found that, like I just mentioned, customers really want to, they want to meet each other because they have the shared interest. So whether it's, I'm a big runner, whether it's, you know, meeting other runners who love a brand or for us, if it's surfers, bringing them together.

18:05So that's one piece. They want to meet others who shop from the same places and they can find connection there. But then they also want to meet people at the brand. I think everybody can relate to wanting to give feedback directly to those at their favorite brand that they purchase from regularly. And so I think that's another benefit of bringing people together in person.

18:25Hannah Fleming:What is Carve's sort of retail footprint like at this point? Yeah, so we are in wholesale partners across the country from specialty outdoor to some larger retailers as well. And then we play in marketplace as well as D2C. We met briefly at the Triple Whale event, the Whaleys. How are you guys using Triple Whale? Are you guys like or how are you specifically around the agentic side of things? Are you guys using Moby 2 for agentic media buying? We have not yet used it for media buying, but we are in Mobi2 every day, asking questions, getting performance updates, and really using Mobi to help power some of this cohort analysis that I've talked about.

19:10So I'm in there building cohorts and tracking them, tracking their LTVs over time, as well as just our day-to-day metrics that we look at via Mobi.

19:18Hannah Fleming:Back to loyalty, do you have any data on the LTV differences between loyalty members versus non-loyalty members for any brands out there who are thinking of starting a loyalty program but maybe haven't? We see roughly 2x LTV for loyalty members versus non. Who do you use for your loyalty program? We are using Okendo. We moved to them this year and we really love them. They have a great dashboard and also integrations with many tools. We use them for reviews, surveys and loyalty. And then how will you approach Q4 this year? Because everyone talks a big game about not wanting to discount, but when it comes to the Super Bowl of discounts, is it something you're going to relent to a little bit and have some discounts this year?

20:04Really, I mean, even leading up to Q4, so just sharing where my mind is at for the back half of the year, we've talked a lot about the swim business and also this growing apparel business that we have. We're really focused on getting more customers using our loyalty program and our lifecycle programs to get spring purchasers to become fall purchasers. So that's like one thing that's really on our mind right now. And then when we think of Q4, we do participate in in the really tentpole moments, of course, but we do try and integrate those loyalty things that I mentioned as much as we can to provide added value during that time period.

20:41So we also might do like point multipliers or other things instead of just straight discounting to still participate in the big sale moments.

20:51Hannah Fleming:Swim seasonality can be brutal. I think that's why over the past 18 months, you really advanced into other apparel and accessory categories. How has that evolution gone for you guys? It's gone really well. And pretty much all can be attributed to our amazing product and merchandising team who've just done a fantastic job with the new product. So that's really one key lever is having great product. And then the second piece goes back to the marketing mix. So really what we've done is shifted from having swim styled potentially just by itself to making sure to include apparel within every piece of creative.

21:30So you'll see swim and apparel styled together, and that's helped get more customers into apparel as well.