EPISODE 72: What can pet food brands to do maintain customer loyalty in the e-commerce space?

Abruscato: It’s become more complicated. One of the things that happened during the pandemic was advertising positioning on Amazon, Chewy, Walmart became much more aggressive. Brands that had not really implemented a strong e-commerce strategy were forced to evolve rapidly during COVID. What you saw, we’ll use Amazon since it’s the most robust of the three, we saw on average for a given search term within the pet category – for example, freeze-dried dog food — you would see six to eight paid-for positions on the first-page results.

Now, for that same exact search term, since COVID, you see 20-plus paid-for positions on that first page. While it has created a great opportunity for growth for some brands, it’s also created an opportunity to lose customers, because there are so many more products able to get in front of them.

There are a lot of strategies you can implement to impact that and get it back in your favor. But for a brand that’s not implementing a great strategy there, your ability to lose customers is as great as it is to gain customers. You really must be conscious of that and making sure that you’ve got a fully vetted and thought-out e-commerce strategy that is not only protecting your existing customers but is also driving to gain new customers.

Beaton: Let’s talk about some of those retention strategies that you are recommending people use and that you are seeing people use. What is the go-to for companies? And what are some of the things that companies should be doing that maybe not all of them know about?

Abruscato: The most obvious and the simplest is any type of Subscribe & Save or Autoship – basically subscription services. All three of those major platforms that we’ve talked about — Amazon, Chewy, Walmart — all offer that.

On Amazon, it’s called Subscribe & Save. Chewy, it’s called Autoship, and Walmart, it’s called Subscription Services. It allows a brand to enroll the consumer into an Autoship program, whether the consumer gets their standing delivery every two weeks or every month. The consumer can choose. Now it becomes a thoughtless transaction, where the consumer doesn’t have to think about, “When is my dog’s or cat’s food arriving?” It will show up each month. Therefore, you get rid of the opportunity for another brand to make an impression your customer if they must go in and use a search term or even their previous purchases.

All these platforms, there are various ways to advertise and get in front of the consumer. It’s not just at a search term. It can be on an actual product listing. It can be within their shopping cart, or when they go to view their previous transactions. There are ways for brands to have featured, sponsored display promotions within the shopping cart.

There are very few places where a brand is completely secure, and their competitors cannot try to impression your customer. Subscribe & Save is one of the most effective ways not only to keep your consumer loyal, but also insulate them and keep them away from competitors’ advertising and promotions.

Think about any type of products you might use as a household item that you may have on Autoship or subscription services, and how often you think about your requirement to order those products. This is something that shows up. You open your door, it’s there, and you move on. When you can get a consumer into these programs, it is the best way to insulate them. Furthermore, it allows you to stretch your advertising dollar further in acquiring new customers as opposed to defending existing customers. There are some efficiencies gained in both directions, in that you can focus your ad spend toward growth as opposed to defensive strategies.

Beaton: Is there a danger for complacency there on the brand’s end? Because I know all the things that I do that are subscription-based are purely convenient for me, right? I don’t want to think about it. Set it and forget it. I’m going to need this product for the foreseeable future – why not just not think about it?

 Do brands need to watch that? I’m sure they’re watching their numbers, but do they need to pay attention to that consumer subset? Check in occasionally and say, “Okay, we still need to communicate with these people.” Because the second they’re getting the product too often, or they need to go in and shift something about their subscription service — maybe they need to skip a month. Does the danger come right back of losing those consumers, especially if they’re like, “You know what, I haven’t even heard from this brand in forever. Why don’t I try something else?”

 Abruscato: Yeah. That really ties into an overall e-commerce strategy, versus specifically one aspect of it. You’ll hear us reference Amazon a lot more in these conversations. Amazon has over 65% market penetration into the U.S. population with Amazon Prime membership.

Amazon has been around the longest. It’s the most entrenched and has habituated the U.S. shopper to convenience. Because of its place within the market, it also has the most robust opportunities to communicate with customers, to promote to customers and advertise to them.  Chewy and Walmart are coming along. They are certainly increasing those opportunities and those programs, but Amazon is kind of the gold standard.

To your point, there are a lot of different ways to stay in touch with your consumer, even though they’re now enrolled in Subscribe & Save. There are what’s called “brand-tailored promotions” on Amazon, which allow you to retarget your existing customers to grow the cart. So, you might have a freeze-dried dog food or cat food customer, but you have treats and these other accessory items that you would like to get in front of them.

Through brand-tailored promotions, you can now retarget different categories of your customers. You have Amazon posts, which is kind of Amazon’s version or form of social media within the platform where consumers can choose to follow the brand. The brand can put out content just like they would on Instagram or other social media platforms specific to the Amazon shopper.

Beyond that, you can offer specific promotions to them. “We know that you’re buying this product. We’d like to expose you to product B as well.” You can offer an incentive — a coupon or some other type of incentive — to try that product out. There are multiple ways to stay in front of your existing customer, beyond just your prototypical search term and Subscribe & Save.

Beaton: Let’s say you have limited resources, and you are not going to be able to focus on all those options on Amazon. If there were maybe two parts of Amazon that really seem to benefit companies in terms of communicating with their customers and maintaining this loyalty, what are they? What are the two aspects of Amazon that are the most fleshed out, that customers really seem to flock to and use the most?

Abruscato: The number one thing — it’s not necessarily what the consumer flocks to — but it is, how do we defend that consumer from all the competing products?

They’re being impressioned wherever it may be — social media, in a retail environment — and now they’re coming to Amazon to search for that product. The number one thing that a brand has to have is what we call “branded search term advertising.”

You have Lindsay’s Pet Food, and the consumer is now going to Amazon searching for Lindsay’s Pet Food. You need to make sure that when they type that into the Amazon search bar, your products are showing up first, not somebody else that is competing with you in that search term.

With branded search term targeting, we’re going to make sure that when a consumer searches for your product and brand name, regardless of where they found it or heard about it, it’s the first thing that they’re seeing. It’s not just a well-thought-out advertising strategy. It is, “What is our most important thing here?” Is it defending our own search term and the consumers that have chosen to engage with us? Or is it going after that, what we would call the category search terms.

If a brand has a limited budget to work with, we’re going to focus more on guarding and protecting the search term. Once we have that consumer searching for that product on Amazon, we’re going to make sure we’re incentivizing them to purchase it on Amazon, called Add to Cart.

We can do this in various ways. We can have a coupon present. One of the great ways to do both is what’s called a Subscribe & Save coupon offer, meaning for a consumer, obviously, Subscribe & Save is a about convenience. “I just want this to show up. I don’t want to think about it.”

The other is that you can offer an ongoing discount. Typically, it’s between 5% and 10% off, so each time that that order goes out, the consumer’s receiving those savings, as opposed to buying it at full price each time on a one-off. The third aspect that’s been around now for about 12 to 18 months is an initial incentive to enroll in Subscribe & Save. Aside from the ongoing discount, I can now offer a consumer 15%, 20%, 30%, 40% off for their first purchase when they enroll in Subscribe & Save. It’s a great way when the consumers search for Lindsay’s Pet Food. We got them to that Amazon first-page results. They saw all your products. Now they’re incentivized by a big discount for the first purchase by enrolling in Subscribe & Save. Now we’ve got them receiving regular subscription orders. We’ve spent efficiently there.

Beaton: Not everybody is on Amazon for various reasons. For some, it has to do with their brand image. Others it has to do with just not being on Amazon yet. There are a lot of different reasons why people wouldn’t be on Amazon. Specifically, a lot more of them — I would probably say most people — are on Chewy. Does Chewy offer the same types of things? Are places like Chewy and Walmart basically using the Amazon model? Is that how their subscription services came to be?

Abruscato: To a degree, yes. Chewy boasts that over 75% of their revenue in 2023 was generated or tied to their Autoship program, which is an astonishing percentage of sales. What it really boasts for a brand is, “Hey, once you get your customer here, they are very well insulated and protected and very regular shoppers, since over 75% of our revenues generated here.”

You cannot manipulate it the same way on Chewy as you can on Amazon. You must essentially gain approval to be on Autoship. With Chewy, they push it very heavily because of those numbers. It’s not difficult to achieve there. Then again, similarly, there are going to be an ongoing discount to receive that regular order.

Chewy has introduced a way to incentivize a consumer to enroll in Autoship as well. It is a similar model as Amazon. Walmart just recently launched their Subscription Services, and that is very much mimicking both Chewy and Amazon with an ongoing discount and a way to incentivize the consumer.

The other up-and-comer right now is TikTok Shop. Again, meeting the consumer where they are at versus trying to get them to migrate to anther website or platform that they’re not on currently. You have their attention wherever they may be — it is best to try to convert that sale.

TikTok Shop is something we are currently working on now to offer our brands an option to gain transaction and sales on TikTok. That’s really understanding the different demographics and the different generations that we’re working with right now.

Most of the revenue is being generated by Gen X, Millennials and Gen Z. They all have different habits of which social media platforms they’re on and which they use. We must make sure we’re meeting the consumer where they are. All those different platforms are going to offer some form of subscription-type ordering.

Beaton: Let’s talk a little bit more about meeting the customer where they are and navigating this point in time where there are three different generations with significant spending power happening right now. In a way that really has not existed in the past, because we have all these technological outlets now. All three generations hang out in very different parts of the e-commerce world. There is some overlap. I think Amazon pretty much gets everybody.

You said 65%. I’m as guilty of being part of that 65% as anybody. What has that done to customer loyalty strategies when you’re having to find all these people in all these different places on different platforms? TikTok and Amazon are very different places to exist in and try to navigate from a personal perspective, so I must believe it’s different from a business perspective as well, if you’re trying to find your customers on there.

Abruscato: Even the way that you go about TikTok is all about the content. They want you to effectively grow sales on TikTok Shop. They want you to post 20 times a week, something around that level of posting content. It’s not as much about paid-for-advertising spots like it is on Walmart, Chewy and Amazon. It’s a totally different technique to be in front of the consumer and turn that into a transaction. It is difficult.

Even as an agency, we are always striving to stay ahead of the curve. Walmart has been leading the charge the first six to nine months of 2024, but now TikTok Shop is gaining a ton of momentum. For a brand that is looking to stay relevant, grow sales and protect their consumers, unfortunately, it is kind of become a necessity to be where your consumer is at. Can you sit here and say, “Oh, well, Gen X is more important than Millennials, or Gen Z is more important?” No. They’re all important because it’s the future of your brand, and you must be where they’re at.

What I tell brands when it comes to e-commerce is you have tremendous opportunity for revenue growth because you’re going to meet the consumer where they are. We’re all going to have to get used to adjusted expectations of net margin, because you’re going to have to spread your dollars in a wide net to make sure that you are staying in front of them. Otherwise, the opportunity to go backwards, like I said earlier on — great opportunity for growth, but equal opportunity for recession.

Beaton: That sounds exhausting from a marketing perspective.

Abruscato: It is. That is why, as an agency, it is so important for a brand to be partnered with the right agency, or at the very minimal, have the right people within their organization to handle these responsibilities and these different outlets, because it’s what’s required today.

So many times, we meet with brands, and they’re late to the table. The amount of investment it takes to get caught up in this industry or in e-commerce is so exhaustive and so expensive.

What’s unique about where we sit today? Chewy launched their advertising portal in December 2023. Walmart is investing a ton of time and money and resources into building out all their programs and support. One thing that’s unique about Walmart is the support that you get from actual human beings to pursue these growth opportunities. It’s unprecedented. Trying to get a human on the phone or on a Zoom call or the various meeting platforms from Chewy or Amazon is like pulling teeth, if not impossible. With Walmart, it’s as simple as making requests, and it’s scheduled two days later. TikTok is aggressive. If you’re pursuing that. We can reach out to TikTok and have a call scheduled within 24 hours. Again, it’s tabbing the right staffing or the right agency.

For us, we really pride ourselves on true partnership in that we’re going to do what’s best for the brand and make sure you’re relevant and staying ahead of the curve on all these platforms. We’re making sure you’re protecting your consumer because you’ve worked hard, you’ve invested a ton of money and resources into procuring them, and it’s as easy as looking the other way to lose them. That’s our key focus with our brands.

Beaton: We’ve kind of been dancing around it and touching on it a little bit, but where have you seen companies tend to go wrong when it comes to trying to maintain this loyalty in an e-commerce space?

Abruscato: I’ve been in the pet industry my entire life. My family owned brick-and-mortar locations for well over 20 years. I was in distribution, sales and management for 10 years, and I’ve been with Brand’s Best Friend for going on seven years. I’ve seen the evolution of the pet industry and the evolution of the consumer.

What brands tend to get stuck on is the margins that they enjoyed 10 years ago, 20 years ago, when it was largely a wholesale environment. They’ve stayed attached to these margins, and they just don’t exist in the e-commerce world. You have tremendous access to volume, but it’s not going to be at the same margins that you’ve enjoyed in the last decade or two, and it’s just a necessity. If you’re trying to hoard margin, unfortunately, it’s a quick way to go backwards.

We’re going to have to spend and invest. We can grow organically, but it’s going to come on the heels of your paid-for growth. Again, tied into what I said earlier about insulating your consumers in these areas where you can protect them from a very aggressive market, you need to get them into these bubbles that exist.

On any of the various platforms – and we’ll talk specifically to Walmart and Amazon. Chewy has a storefront option, but unfortunately, the storefront option on Chewy costs several thousands of dollars, tens of thousands of dollars to create on Chewy. Whereas on Amazon and Walmart, they’re relatively free. Yes, you’re going to have to create content, which always costs money, but the creation and development of your storefront is free.

If you can get your consumer into your Amazon or Walmart storefront, that is another safe place for them to browse through your entire catalog unsolicited by competitors’ products. When we talk about, we’re going to advertise off-platform, if a brand chooses to advertise to their consumer and say, “Hey, go directly to Walmart or Amazon,” you’re going to push your storefront, because now the consumer can get there and see all the different products that you have to offer, as opposed to one.

It’s also a safe place where there are no advertising spots available within your storefront. Again, it’s this nice, safe place for your consumer to spend time, learn about your brand, learn about your products, be able to convert to the transaction right there without ever seeing a competitor’s advertisement or product. That, again, is about strategy.

When we’re going to push social media promotions, we’re going to want to drive the consumer back to your storefront, not a given listing. Even if you’re trying to promote a specific product. Don’t send them to that product detail page, as we call it. Send them to your storefront so they can get exposed to all your products. Again, you don’t have to spend money to defend that position.

Beaton: How easy is it to drive people to these storefronts? How are companies doing it? Are they going on Instagram promoting their brand and saying, “Hey, go to Amazon.” Is it social media? Is it email marketing? Is it off their own website if they don’t have their own digital storefront? What are the paths that companies are taking to get customers where they need to go?

Abruscato: This is somewhat unique within the pet industry in that there is still a point of contention between brick-and-mortar retail, sometimes called neighborhood pet, and the perception that it is disloyal to them if a brand is also promoting Amazon or Walmart or Chewy. For a pet brand, it’s a tough decision to say, “Hey, we’re going to advertise through our own social media platforms, whether it be Facebook or Instagram, we’re going to advertise our brand and push those sales back to these e-commerce platforms.” That becomes a difficult decision.

To your question, is it easy to do? Yeah, and we can create incentive. Here is a specific coupon code, or discount code, that when they use that at checkout, they’re going to get a discount. It can be a great way to drive outside-in sales on any of these platforms.

The question becomes are you willing to create a friction point with your traditional wholesale and brick-and-mortar sales? That is more the dilemma for brands than the question, is it an effective model? Absolutely. It’s effective because, again, it ties back into meet the consumer where they’re at. If you can find them and reach them on their mobile phone, why would we potentially risk losing them between now and the drive to the retailer. We’ve got them right then and there. Let’s incentivize them to purchase and make the transaction right there.

We know that when we can impression the consumer on their mobile device, the next stop is Amazon. If they’re a Chewy consumer, they’re going to Chewy. Walmart’s going to be a much bigger player in 2025 than they are today. TikTok Shop — let’s get the transaction right here and now and not wait. But again, the pet industry is somewhat unique with that point of conflict.

Beaton: What do you think companies in the pet space should be focusing on when it comes to customer loyalty? What strategies for driving customers to, for instance these Subscribe & Save programs, or just improving loyalty overall, when there are so many different brands they could go to. What’s been particularly successful?

Abruscato: The circumstances change for every brand. How big is your brand? What category are you in? Are you a supplement? If you are a supplement, are you hip and joint? Are you probiotics? Are you a pet food? What type of pet food are you? Canned? Freeze dried? Are you established in these places? Are you trying to grow?

The circumstances are going to change from brand to brand and situation to situation. The number one thing that you must be doing today is advertising on any of these platforms. For Amazon, it offers the most robust opportunity for growth and placement because it’s been around the longest. On Chewy and Walmart, where these are much younger programs and offerings, it’s a unique opportunity to be ahead of the curve. Your competition is not investing — or not investing as much right now — in Chewy advertising or Walmart advertising. You have an opportunity to be first at the table with those two platforms. In 2024, that’s rare to say, “Hey, I can be one of the trailblazers here.”

That’s why we’re really pushing brands that direction. It may not be a substantial number of your growth opportunity today, but as we get ready to plan for 2025, it needs to be in the playbook. The number one thing, as we alluded to earlier, is you must show up when the customer is searching dog treats, canned dog food, freeze-dried cat food. You must show up in your perspective category. You must be defensive about your own branded search term. From there, it’s an easy playbook to say, “Okay, well, then the next best thing is to be engaging in the Autoship or Subscribe & Save services that are there, because the consumer is habituated to convenience more than ever.” We’re all guilty of it. I ordered something the other day, and it said 24-hour delivery available from Amazon, and the next day it would have been 12 or 14 hours, and I’m like, “Where is this product?” I had to stop myself and remember it’s been 12 hours. That is how convenience driven we’ve become.

What’s more convenient than not having to think about it? That’s number two. Now, from there, as much of a point of conflict as it is, all these platforms are vying against each other for the consumer’s attention, time and ultimately money. Driving outside-in is one of the most important things a brand can be doing today. Even though that’s somewhat a point of conflict with traditional brick-and-mortar and wholesale, it’s almost essential to make sure that we’re not just trying to rob Peter to pay Paul in these situations. Advertising on Chewy, advertising on Walmart, and we’re just flip flopping the consumer from one to the other. We need to be generating new interest, new consumer bases, pulling in from any direction that we can to make sure we’re growing efficiently and effectively overall, and not just pulling a customer from one platform to the next.

Beaton: What is the responsibility mix right now in terms of a brand going on these online spaces and platforms, driving people to their own spaces. They provide the tools and the digital space, but do Chewy and Amazon and Walmart feel any obligation to help brands on their sites? I suppose Chewy is the only one of those three that is specifically pet focused. Is the onus mostly on the brands at this point? Are the brands driving the traffic to these platforms at this stage of the game?