The RetailWire Podcast

Building Loyalty with Innovative Referral Strategies

• RetailWire

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Join Matt Roche, CEO of EXTOLE, as he shares the frustrations with digital marketing that inspired the creation of a platform freeing brands from reliance on Google and Amazon. Learn how EXTOLE integrates with Shopify and Salesforce, turning loyal customers into powerful brand advocates through seamless referral and ambassador programs. In conversation with Melissa Minkow, Matt explores the power of authentic customer referrals, ethical tracking via QR codes, and the role of rewards in customer retention. Packed with insights, this episode reveals how to drive growth and loyalty through customer-led marketing strategies.

RetailWire is the retail industry's premier source for news, analysis, and discussion. With a focus on the latest trends, technology, and consumer behavior, RetailWire provides a platform for industry experts and thought leaders to share their insights and perspectives. Whether you're a retailer, supplier, or service provider, RetailWire is your go-to destination for staying informed and ahead of the curve.

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Speaker 1:

Hi, my name is Melissa Minco. I am the Director of Retail Strategy at Digital Consultancy CINT. Joining me today, I have the CEO of XTOL to talk about customer-led growth. Matt Roach, Thanks for being here.

Speaker 2:

It's a pleasure to be here, Melissa. Thank you.

Speaker 1:

Yeah, excited to get into this conversation. To kick things off, let's just talk about how XTOL came to be. What's the origin story of XTOL?

Speaker 2:

oh, I really love this. The uh. My team was very early on in the early 2000s. We did a company called Offermatica and Offermatica was one of the early landing page optimization companies, and so we spent a lot of time trying to improve the performance of paid media, essentially so media that at the time people were buying through Google. And there were these moments where we would go into the customer and say we improved your landing pages by like 20%, you're getting all this extra revenue. We're really excited. And the first thing they said to us is like great, now we can spend more money with Google.

Speaker 2:

And your heart sinks in your chest and you're like, ah. And you just your heart sinks in your chest and you're like, ah. And so once I got over the self-pity part of it, I realized, oh my God, this isn't just my problem, this is their problem. Right Right Now I'm looking, I'm saying, oh my God, as these, if these guys can control the flow of money, then they're no different than someone who like imagine there's only one bridge between you and your customer and this guy is the guard at the bridge and he says if you want to cross the bridge to go to your customer, you're going to have to give me 30% of what's in your cart. You're like no, and they're like fine, don't go to your customer Right. And so what was irritating to me was life-threatening to these marketers. And so we decided to do after Offermatic, which is now Adobe Target.

Speaker 2:

After we did this, we said how do we provide a marketing approach, a way of gathering customers that doesn't require us to pay the gatekeeper and pay the toll taker, whichever you want to call them? And we came up with the approach Stolas taken, which is to go to your customer base and say, instead of paying some random guy who's holding me for ransom, why don't I actually reward my customers for doing what, frankly, they've been doing the whole time? Because, if we think about it, do you really think Google's creating all the purchases for birdies? Do you really think they're creating all the purchases for literally 90% of what you're doing? Like they're not telling you what book to read, what car to drive, what clothes to wear, what shoes to wear, where to go to restaurants. Your friends are doing it and yet they're collecting 30, 40.

Speaker 2:

In the case of Amazon, right now, if you're selling through Amazon and you want a listing in the top set of results. You are paying 50%. 50% of what that end customer is paying is going to Amazon to just show up at that position in the listing and along the way it's screwing the customer because that's usually not even the best deal. And so what we wanted to do is to provide a way, sort of almost mission-driven to say how can we connect with the people who actually care about our products, actually love our products? And you turn it from a kind of word of mouth let's hope it happens organically into a real discipline, numbers driven way of marketing.

Speaker 1:

Love it. So you've just kind of described it as a service At a product level or at like a more technical level. What technology products are you providing your customers then?

Speaker 2:

Okay. So Extol is a platform. Extol plugs into your retail platform like a Shopify. It plugs into Salesforce, it plugs into a wide range of back-end platforms to basically collect information about your customer's journey and then to be able to present offers in front of them. So we could put it onto web pages, into mobile, out through email and SMS to basically say hey, listen, if you refer a friend, we'll give you a reward and the other person will get a reward. Or if you're an ambassador at a athleisure company, if you talk about this to your yoga class and they come in and buy with your code, they'll get a discount and you'll be recognized as one of our ambassadors. So it is different ways of promoting programs, of delivering the program, the actual screens where people fill things in, managing all those links and codes and then rewarding and probably more importantly, not rewarding people, because sending out gift cards is easy. Deciding when not to send a gift card to someone is a harder problem. But it's all that and so that you can manage it without it crushing you.

Speaker 1:

That's great and I feel like, in today's omni-channel world, bridging that gap and making sure that the attribution is correct and that you're really tracing where they're discovering these brands, it's really tricky and that's kind of the million dollar question for a lot of retailers. So you said you provide like a unique code, a discount code or something like that. Does that kind of bridge that gap then, so you can trace it?

Speaker 2:

Yeah, and it's funny how it's morphed. It started out as links, it started becoming codes, now more and more often it's QR codes, because what I want to do is I'll say, oh, I'll just show you my phone and you'll take a picture of it, and now I've made the connection and so how it changes over time. And, frankly, where we want it to go is if you're sitting in a branch with a bank or you're sitting in a retail store and you say, and they say how did you find out about us? You don't say a website, google search, right? Oh, great, you know. Like you say, oh, melissa, and we go. You know what we're going to thank Melissa. All right, that we are actually as a company, we are going to use our resources to find these great people who've been doing it.

Speaker 2:

One of my favorite conversations that happens with customers is when they and this started happening in the edu space, like the online universities yeah and they would say you know, 98 of our customers are, are referred, and I'm like you know that makes sense, like who's going to go pay for online education that you find on randositecom, right? And then they're like well, do you know who referred them? Are you nurturing these people? Are you recognizing them? Are you having a party for them? Like if you actually knew that there was a group of people who were affirmatively driving your brand? Does it feel like the right approach is to just ignore them?

Speaker 1:

right? Yeah, it's a great point and you mentioned you know you're collecting all this data on these customers. What does that footprint look like? Is it solely their social media behavior? Is it search engine browsing behaviors? What information do you collect?

Speaker 2:

It's really interesting we are doing, we're not. We don't reach out into social media, so all of our programs are driven by campaigns that are created inside of our platform, so we're not looking and saying oh, you mentioned us on Twitter. There are social listening platforms. They're fantastic. We partner with them. Ours are all sort of very deliberate, Like I'm going to ask you to do something like refer, be an ambassador. You know, one of the favorite ones over Christmas is ask somebody to buy something for you. Love that. I'll drop a hint. But it's like oh, this is cool, I can't afford it. It's weird. My daughter really likes this. Or there's even a grandparents one that we're starting to do, which is ask your kid what they actually want.

Speaker 1:

I'm thinking all my friends who send you know their boyfriends an engagement ring.

Speaker 2:

Yes, this is what I want. That is a referral. That is that is Exactly.

Speaker 2:

So that's, it is trying to stimulate this kind of behavior so that we can track it and recognize it. The tracks that are left are you know, everything is permissioned, everything has is opted in. We do nothing that is behind the scenes, unless someone opts in. So then when someone comes in and says, oh, you dropped a hint to buy this and come in, well, obviously we're maintaining that relationship because we want to give you a reward. But what we can start seeing is like oh, there are certain people who drive, you know, I refer to Melissa, and Melissa refers to Sarah, and Sarah refers to Robert, and suddenly you get these chains of people.

Speaker 1:

Well, that means either me or Melissa is a much better customer than a normal customer and right now you don't know.

Speaker 2:

You don't know who Melissa is, other than a walking credit.

Speaker 1:

Yeah, that's a great point, and I remember when we spoke a little bit about all of this in our prep call, we talked about how, in grad school, I was told by some professors that what made Paul Revere get the word out so effectively was that he is what's called a broker of information. He had a really extensive network. So what does your relationship look like with those kind of hyper-social, hyper-connected consumers who have a really wide network?

Speaker 2:

This is a great question because it draws into attention that there's this world of like referral marketing and then influencer marketing.

Speaker 1:

Yeah.

Speaker 2:

And the way it's thought about now is like referral marketing is like your customers and authentic and they're small and they're kind of cute, like bunnies, you know, but if there's enough of them they'll make money. And then influencers is like oh okay, these are the, I'm going to go onto an influencer network and I'm going to rent them for a tweet or I'm going to give them some sort of affiliate payment. The thing that it ignores is how all the kind of the spectrum that happens. So there are influencers that are commercial, you know, like entities like you pay them to say something right, nothing wrong with that, not really our business. What we're trying to do, we call it ambassadors, and an ambassador is an influencer that actually likes your product right, which means they probably bought it, and so sampling is important and you know there's all sorts of really great stuff around influencer marketing that again, we have partners who can do that, that sort of hey, look into my big database and I'll find you someone who appeals to the kind of customer you're reaching. What I want to do is say you know, if I get a hundred thousand advocates, I'm pretty sure that about 200 of them are going to become super advocates and maybe 100 of them are going to become ambassadors.

Speaker 2:

The ambassadors, the sum total of revenue that they'll deliver will be equal to all the revenue driven by all of the normal referrers. You'll get roughly 50-50 out of this, but you have to actually nurture them and develop them. You have to say, hey, you referred once, do it again and we'll give you this thing. It's like, wow, you've brought three customers in, you're now an ambassador. You get a different program you may get.

Speaker 2:

You know, under normal circumstances we would never send more than $600 of rewards to someone because you have to send out tax forms and it's just a hassle. But if someone has done 600 and I reach out to them and they're like, yeah, I love your products, then we'll say, fine, here's a 1099. Yeah, let's party, we can do something together. That could be fun. And what you'll learn about it is they end up being people that represent something. They are doctors, they are nurses, they are students, they are, you know, like there are. There are campus influencers, right, and those are very, very difficult and very expensive to find in the wild, but they're sitting there inside your customer base.

Speaker 1:

Right. So they're kind of like the KOLs that's kind of what they refer to them, as in Asia for live streaming. It's like they're knowledge leaders. They're kind of experts in their space but very organically, but they're trusted. Yes.

Speaker 2:

It literally could be your sister or cousin or best friend from college. It's like that's the thing we want them to be, something we want them to look a certain way and we want it to be, but in reality, the people who are good at influencing people are people who are good at influencing people and they look all sorts of different ways.

Speaker 1:

Real people yeah.

Speaker 2:

It turns out, they're actually mostly real people.

Speaker 1:

Right, relatable, yeah, that's literally what I love.

Speaker 2:

Whole business is built around people.

Speaker 1:

That's so fun. Whole business is built around people.

Speaker 2:

That's so fun. It's not like you know. We're just taking the labor out of it. So to make sure that you can get actually closer and closer and closer and closer to your customer and not just in a what do you want to buy next? But this other part, which is like too much of our relationship with customers, is around again. As I said, a walking credit card. What can you spend? What can you buy? Buy more, buy more, buy more as opposed to hey, have you ever visited one of our branches? Why don't you come by? Why don't you come into the store? Why don't you bring a friend into a store? We had one with a bank that was opening coffee shops in their branches. We're like bring a friend and we'll buy you coffee.

Speaker 1:

That's awesome.

Speaker 2:

So you're just saying well, that seems human and normal, like friends and coffee, and it's not deceitful Like they have a coffee shop. Let's just do things the way normal humans do them. Find is the benefit All this is when you treat your customers well you will have a healthier customer base, and when a healthier customer base means they're going to spend more over time and they're going to stay longer, and they're going to be happier with what you do.

Speaker 2:

I mean, what's amazing to me is the simple act of having come through referral will make somebody 20% more profitable over their lifetime. Wow, regardless of sector, the act of recommending will make you 20%.

Speaker 1:

Wow, that's a really important data point. I want to like double click on that for the listeners. Can you say that one more time? Just because that's huge.

Speaker 2:

The act of coming of, of being a participant in one of these programs where we're referring and advocating whether you're the advocate or the friend, you will be 1.2 or 20 more valuable over the customer life cycle than someone who came in through a search, a product ad, an link or just came to your brand.

Speaker 1:

That's awesome.

Speaker 2:

Yeah, that makes a lot of sense, the simple way I say it is like how you enter is how you're going to leave. Why would you have a greeter at a Walmart? You don't really need a greeter at a Walmart. It's not that hard to navigate. You walk in and if the first thing you feel is human, then when you're done, that is going to echo and reverberate through your whole experience.

Speaker 1:

Right.

Speaker 2:

If it starts in a human way, it will end in a human way, and you can look at cynically and say well, we're going to pretend to be humans so that we can make more money out of it. But what if you just treated them like humans and, as a result, you had a longer, better relationship with Right, there it is. I'm crazy.

Speaker 1:

No, but that's what happens. Right Is brands forget that, so that's really fantastic.

Speaker 2:

So I don't. This is, you know, to the CMOs or the VPs of marketing who are like, listen, this is all great, I have to deliver a certain amount of acquisition. What I will say is, if you are not demanding 10% minimum of your customer acquisition coming through customer-led growth, then you are just overpaying for marketing. You are not going to continue to be able to afford 30% of your net sales going to media, so you're going to have to find a lower cost, higher value part of marketing so that you can afford it. If you think that advertising is going to be the core of your marketing, you're not going to be able to afford it, and so this is a brass tax no bullshit, measurable way of driving marketing. It just happens to have the added benefit of being human.

Speaker 1:

Right, that's another fantastic point. So you've kind of touched on how you interact with the end consumers, that you want to provide those kind of referrals. How does your day to day pan out with these retailers then? Who are the stakeholders you're talking to first and foremost at the retailers, and what are you saying to them?

Speaker 2:

Great question. This is the dilemma and the opportunity for us. There are two types of retailers, two types of retail marketing roles that are affected by this.

Speaker 2:

One is the acquisition people, who tend to be affiliate, paid search, media. Right, they have a goal of a certain number of customers to be brought in, a certain revenue and a budget to spend together. We have to work with them because we are a key acquisition source and so, once again, if you are an acquisition marketing and the pie chart that you're showing at your weekly or monthly review doesn't have a sliver for this, then you're just wasting money, and just as flat out as that. The other is the retention Send out emails on a thoughtful cadence to your customers, hopefully targeted, hopefully using really sensitive personalization, etc. So that they come back and you have higher long-term growth. So that's higher long-term value, more frequency, and so that group, the opportunity for them is to say, hey, listen, I can get more value out of my existing customers, especially when they're not ready to buy another thing, because if someone's not ready to buy, they might be ready to do yeah.

Speaker 2:

Does that make sense.

Speaker 1:

Totally. That's a great point, and is every brand. Oh, what were you going to say About mattresses or cars?

Speaker 2:

How often do you buy a mattress?

Speaker 1:

Right, yeah, exactly Every decade.

Speaker 2:

Yeah how many emails are you going to get from a mattress person before you're like delete you know, but mattress the people who sell mattresses online tend to have amazing programs, because one thing you can do after you've bought a mattress is you can tell someone.

Speaker 1:

Right, that's actually a perfect segue, because I was going to ask you are there certain types of brands or categories of brands that lend themselves better to being an X toll client, or is it just everybody would make a great client?

Speaker 2:

If you can market, you can do customer led growth Awesome, right, if there is a market for your product this is just a channel to reach that market.

Speaker 2:

If you don't go, market like referral tends not to be a great last ditch my brand is dying, let's see what I can do. It doesn't work. But if you can market through other forms, you can market through referral. So what makes someone good or less good at it is this is funnel marketing 101. It's just, you have two funnels, unlike your other form of marketing where you'd say, well, I'm buying a keyword, they're landing and I have to convert them.

Speaker 2:

You say, well, the first thing I need to do is convert advocates. So I have to figure out how am I going to reach them through my existing assets my email list, sms, social media presence, the site mobile? How do I reach them to tell them this program exists? And we have people putting it on statements, putting it on flyers, so many things on boxes, catalogs. And then, of all the people I reach out to, how many of them eventually become an advocate? Right, that's my first funnel and it's just like any other funnel. You'll know how to do it once you see it.

Speaker 2:

The second funnel is once there's been a share, that's just marketing, like when I share, do people land? When they land, do they visit and there's some nuance to it. That's kind of fun where, if you're doing search type stuff, you may say well, I want to reinforce what the message was in the ad I want to reinforce, I want to target or personalize the product, whereas when you're doing this kind of social funnel optimization, you want to reinforce the relationship. So your landing page should say hey, melissa thought that you would like. Right, so you're not just a retailer, you're Melissa's retailer, and the more that you can embrace that, then the better your funnel will work.

Speaker 1:

That's super interesting. So we're coming up on time. But one of the reasons I love I know crazy We've covered a lot of bases One of the reasons I love talking to you is because you're so specific with terminology. You're very intentional, very articulate in that way and you kind of differentiated a little bit between recognition and reward. But you didn't really go into the difference there at kind of like a philosophical level. For X tool, what's the difference there?

Speaker 2:

for customer led growth to work, and customer led growth is driving your marketing from your customers out to not from your media in. For customer growth, you have to motivate right, and so there's. There's three things you want to think about. Like classically, you'll think about attribution. Do I give credit to a program? And that is like well, am I going to have to pay Google for this? Am I going to pay you for this? And that's great. You're going to have to deal with attribution. It's a forever problem.

Speaker 2:

Recognition is different. Recognition says that even if I have to pay like if there's some they clicked here and they clicked here and they clicked on the link you always pay your customer. You never said oh no, I'm sorry, you were last click or you were first click, or I'm only giving you 50% because I did another click. You always pay them, and you always pay them because you always get it back that person. When they get recognition, we'll spend more. I've covered this one, right, yeah?

Speaker 2:

The third is the incentive part, which is saying you have to like. Part of the deal is you have to give them something right, and what you don't want to do is think about it as like oh well, now I'm lowering my price because I gave him a discount. It's like no, this is equivalent to what you would have spent at Amazon or Google or Meta. This is a marketing expense. It may show up as a discount, but it's a marketing expense because you're not paying Google. What you're doing is you're using this to motivate somebody and I think, honestly, rewards are going to be the next phase of branding, meaning how you choose to reward somebody is a reflection of who you are, and I think what we're going to see as things become more motivated, more excuse me automated, is the clever. Rewards are going to be motivating people.

Speaker 1:

Yes.

Speaker 2:

Think about it. How does a presidential campaign give a reward to someone who donates they?

Speaker 1:

give you a sticker.

Speaker 2:

They give you a hat, you know, and it says hey, I'm not saying whichever your candidate is is written on that map. So what they're doing is they're saying all of this is an opportunity to reinforce my brand, the message, what I stand for. I should be giving out a reward to get for a month of free clear to people who buy a travel bag, Because it's about that experience. And now you have this whole new palette of marketing options that just wasn't available for a night.

Speaker 1:

It is yeah Well, listeners heard it here first. Rewards are the next phase. I think that's incredibly important, especially because you talked about it in the context of identity and that's really habit building. There's a lot of research on that, where if you want people to change their habits, you need them to associate that new habit with a sense of identity, and that's what a reward is right. It's playing into that sense of identity.

Speaker 2:

It's an opportunity.

Speaker 1:

Exactly.

Speaker 2:

All these are opportunities, and I'm just giving you another tool set to use that, coincidentally, could give you 10% or more of your acquisition, so I think that's kind of nice.

Speaker 1:

Absolutely Well. That's a perfect note to end on. Is there anything we didn't cover that you wanted to mention?

Speaker 2:

That's a great question. No, I think this is a great conversation, I think you did a great job and I really appreciate the opportunity to talk to this audience about it, because it's obviously something I care a great deal about and it's something I want other people to care a great deal about.

Speaker 1:

Totally Well. Thanks so much for joining me today. Love the conversation.

Speaker 2:

All right, thank you.

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