Clarus Marketing Group creates and markets high-value subscription programs designed to save consumers time and money. Clarus Marketing is one of the pioneers of creating free shipping and subscription-based solutions for e-commerce businesses seeking to ease consumers’ concerns about high shipping costs.
Their flagship site, FreeShipping.com, was built on a simple notion: Free shipping drives e-commerce sales. To date, Clarus Marketing has served over 400 retail marketing partners, 1,700+ affiliate benefit providers, and over one million value-seeking consumers.
BusinessInterviews.com: Can you talk about the inspiration behind building a company on the foundation of free shipping?
Tom: Shipping costs are a tremendous pain point for online consumers. Study after study shows that shoppers will abandon their shopping carts well over half the time if they find out they’re going to be charged for shipping. Research also confirms that free shipping is the most effective, reliable sales closer the direct marketing industry has ever devised; in fact, shoppers will happily increase their order amounts to qualify for free shipping.
Our goal with FreeShipping.com was therefore twofold: To help solve the shipping pain point for consumers, and to help retailers take optimal advantage of free shipping offers.
The Internet allows retailers of all sizes to sell their products to practically anyone with an online connection, but smaller merchants can’t absorb the associated shipping charges as easily as big, brand-name stores can. By giving subscribers cash back on their shipping charges, FreeShipping.com also gives smaller retailers the opportunity to benefit from the power of free shipping without saddling them with its costs.
Since its launch in 2002, we’ve continually broadened FreeShipping.com’s benefits to help consumers save throughout their online transactions. In addition to free shipping, subscribers now enjoy 10% cash back at over 1,000 retailers when they make purchases through our site; cash back for return shipping fees; a 90-day low-price guarantee; and a deep library of retailer coupons that they can stack on top of the savings their subscription provides. We’ve also augmented our search tool — subscribers can now search for any item sold in our network of cash-back retailers and instantly see the current price on that item at every retailer that sells it.
Thanks to our ongoing enhancements, FreeShipping.com has become a true power shopping program for all of our subscribers, which in turn rewards our retail partners. The substantial, convenient savings have helped us build a base of engaged, highly qualified consumers who are eager to buy something virtually every time they log in to FreeShipping.com. In fact, our recent doubling of the cash-back payout to 10% has already resulted in significant increases in sales conversions, average order values, and purchases per day. As we continually test and hone every aspect of the program, we’ll keep driving growth in our subscribers’ usage — and our retail partners’ revenues.
BusinessInterviews.com: Many people that I know use Amazon Prime because of the free shipping aspect. Why do you think that the free shipping trend hasn’t really caught on, despite having the potential to seriously increase sales?
Tom: “Free” shipping isn’t really free, unfortunately. Someone has to pay the costs involved with moving an item from the warehouse shelf to the consumer’s door. While Amazon has decided to cover the 2-day shipping charges for Prime members in exchange for higher purchase volume, it also recoups at least a portion of those costs through its membership fees.
Most retailers take a more conservative approach with their shipping strategy. With a few exceptions — e.g., Nordstrom, L.L.Bean, and Zappos — retailers don’t offer free shipping year-round; they save it for prime shopping periods. Virtually all retailers promote free shipping at some point during the holiday season, for several reasons: They face increasing pressure to do so, just to keep pace with their competitors; not coincidentally, consumers practically demand it as a cost of closing holiday sales; and just as critically, free shipping deals work, time after time.
In many cases, though, even during the holidays, retailers tie free and/or expedited shipping to a minimum purchase amount, in order to reduce or eliminate the impact of those costs on their bottom lines. This is an effective method for controlling costs; in fact, Amazon employs it with non-Prime customers, providing free delivery on orders that total $35 or more of qualifying merchandise. However, Amazon does that year-round, while most retailers tend to do so more sporadically, presumably because they haven’t yet figured out how to consistently offset their shipping costs.
Unfortunately for them, this approach essentially cedes market share to Amazon, which puts greater pressure on retailers to try to make up that ground. Target, for instance, decided to give shoppers free shipping on every order on its website through December 21 of this holiday season, a clear attempt to compete for free shipping devotees with Amazon. The entire retail industry will be interested to see the short- and long-term effects of that effort.
From our perspective, we know that free shipping closes sales, consistently and throughout the year, which is why we connect consumers and retailers to savings on shipping costs 365 days a year.
BusinessInterviews.com: What’s your leadership philosophy look like?
Tom: Internally, my goal is to lead by example. I’m an avid learner and a sponge for new ideas, and that’s what we look for in team members. Our mission is to get the right people in the right seats, through recruitment and in our promoting practices, and then empower them with personal ownership of their processes and/or departments.
We maintain an open-door policy throughout the organization and encourage everyone to share their thoughts and proposals, either directly with me or with a co-worker, supervisor, or someone else. If an idea will save time and/or money, perfect a process, improve a program, enhance the workplace, or even just brighten someone’s day, we want to hear it. To stimulate the open flow of ideas, we hold monthly lunches for the entire company so people can get to know folks they might not interact with on a regular basis, and we take the time to recognize people who’ve done outstanding work, based on commendations from their peers. At our holiday party every December, we also announce our company MVP, Rookie of the Year, and Unsung Hero, which are determined by a companywide election.
Externally, our goal is the same: To forge a leadership role by following best practices and listening to what our customers and the data say. The Hartford Courant and FOXCT has named us one of the top workplaces in Connecticut the past two years, in good part because we’ve created an environment that fosters and responds to employee engagement and feedback. Similarly, we’ve been a pioneer in the subscription commerce field because we constantly seek input from our subscribers, clients, and partners, and because we’ve embraced comprehensive testing and analysis of every aspect of every program we create.
E-commerce has generated an explosion in consumer data, but it brings to mind that old saying about using lampposts for illumination rather than support. Online retailing is still an evolving platform, and some of the steps for building loyalty differ from those used in the brick-and-mortar world. We’re constantly digging far below the surface to find out exactly what drives online consumers to return to a retailer again and again. Free shipping, for instance, obviously drives sales, but what makes a shopper choose one retailer over others that ship for free and charge similar prices? This exhaustive, ongoing data analysis allows us to build customized programs that appeal to the exact demographic groups that our clients want to target, thereby setting them apart from their rivals and further establishing us as an industry leader.
BusinessInterviews.com: Can you talk about how your Return Saver program is revolutionizing e-commerce and online returns?
Tom: E-commerce is still a relatively new platform for retailers and shoppers, and nowhere is that more apparent than in the area of return policies. For decades, consumers have enjoyed easy, cost-free return processes, so they’ve grown accustomed to simply taking unsatisfactory purchases back to brick-and-mortar stores and getting free exchanges, in-store credit, or cash back.
Returning an online purchase is necessarily more involved than that, given the physical distance between retailers and most of their customers, which also adds shipping costs to both the original order and its return. However, consumers understandably don’t want to pay to return items that don’t meet their expectations.
Retailers, though, can’t afford to absorb a glut of return shipping fees, particularly in light of the rise in return fraud, as well as the possibility that the retailer already paid the original shipping costs. Returns already hurt retailers’ bottom lines via lost sales, merchandise that can’t be resold, or both; adding yet another cost only compounds the damage. It’s therefore not surprising that a January 2014 Internet Retailer survey found that only 9.8% of the merchants in its Top 500 Guide offered free return shipping.
Satisfying customers is a critical factor in building brand loyalty, of course, and asking your audience to pay the costs of returning unwanted items clearly won’t lead to a contented customer base.
Enter Return Saver. For just $49 a year, online shoppers can receive free shipping on an unlimited number of returns, no matter which retail websites they frequent. We’ve also partnered with FedEx Ground®, the exclusive shipping carrier for Return Saver, to ensure that our subscribers enjoy world-class convenience, logistical support, and reliability when they make returns.
Return Saver is a solution to the return shipping conundrum that truly benefits both parties. Our subscribers tell us that they’re making more purchases online because they know they won’t have to pay for shipping (or have those charges deducted from their refunds) if they’re not satisfied with their purchases. Retailers likewise don’t have to worry about return shipping costs — and if they promote Return Saver on their website, they can even generate incremental revenue for every customer who signs up.
BusinessInterviews.com: How can online subscription products help generate a brand new revenue stream for businesses?
Tom: Subscription products are one of the most effective, mutually rewarding loyalty solutions in the market today. When executed properly, a company creates and promotes a suite of valuable benefits that appeal to its core audience. Customers then voluntarily pay to access these ongoing deals, thereby cementing their connections to the company. These relationships benefit both sides: Customers save on purchases with the company and therefore continue to shop there — while increasing their purchase frequencies and average order sizes.
The key to long-term growth and success is to continually enhance the program, upgrading its benefits in response to the subscribers’ stated needs and interests. This requires the company to stay in constant, two-way communication with subscribers, soliciting their feedback and input, but that’s a positive move. By doing so, the company can strengthen its brand and develop (or solidify) a reputation for world-class customer service and shopper-friendly policies.
Businesses don’t necessarily need to market their own subscription products to generate new revenue streams, though. Alternatively, they can promote other, non-competing companies’ programs on their own website and earn a commission every time one of their customers signs up for the program. At Clarus Marketing, we have a large roster of retail partners that generate incremental revenue by promoting Return Saver and other programs of ours during their checkout processes.
Additionally, retailers can generate heightened traffic to and sales on their own websites by joining FreeShipping.com, either by participating in our network of 10% cash-back retailers or as an affiliate. Our audience base consists of hundreds of thousands of eager, qualified consumers who come to our site ready and able to buy things, and retailers that cater to their interests will enjoy increased traffic and sales figures as a result.
BusinessInterviews.com: What’s the most exciting thing on the horizon for Clarus Marketing in 2015?
Tom: I can honestly say that I’ve never been more excited about the future of Clarus Marketing than I am right now. We believe that cash-back offers are the next big driver of retail loyalty, and we’re at the forefront of that movement. This summer, we doubled FreeShipping.com’s cash-back payout from 5% to 10%, and the results were as good as we anticipated. Within a couple of months, we saw a 45% increase in sales conversions when subscribers clicked through the program site to participating retailers; an 11% increase in average order values; and a remarkable 65% increase in average orders per day. As we speak, we’re analyzing the results of our various holiday marketing efforts, including a promotion that ran from Black Friday through Cyber Monday and gave subscribers 20% cash back at five different retailers each day, and we’re very eager to see what all that data tells us.
FreeShipping.com’s enhanced search engine, which also serves as a price comparison tool for our subscribers, gives us yet another way to promote the program to online shoppers. Imagine being able to find the best price on literally any item available at over 1,000 top online retailers within seconds — our subscribers can do that whenever they want, 24/7/365. What’s more, they can search for whatever they want using virtually any parameters they choose, from a broad category term like “winter apparel” to something as exact as a SKU number for a specific item they might have come across while browsing on another website or in a catalog they received. The ability to pinpoint the best deal on virtually anything you might want is a very powerful tool these days, especially for budget-conscious consumers.
We’re also thrilled about the prospects for Return Saver. It’s getting a lot of positive reviews, from our subscribers as well as from consumer experts, and deservedly so. Return shipping has been a point of contention in the retail industry for years, and Return Saver is a viable solution to both consumers’ and retailers’ concerns, delivering the savings and peace of mind that customers want without imposing any costs on retailers. We’re currently investigating several promotional and distribution channels that look very promising.
We also introduced our first international product last year, a program called DeliveryDeals that we launched in the UK. It’s similar to FreeShipping.com — it offers subscribers 10% cash back on purchases, as well as cash back for delivery and return delivery charges when they shop through the site — and we’re excited about putting the lessons we’ve learned from our ongoing FreeShipping.com testing and enhancements to work on growing that product. The UK market is different from the US market, of course, but shoppers across all cultures tend to respond favorably to relevant, tangible money-saving benefits, so we’re very optimistic.
All in all, it’s an exciting time to serve as CEO of Clarus Marketing. We’ve had a great 2014, and I can’t wait for 2015.
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