Soap.com to Loyal Customers: You Decide the Discounts

Merchants often exert lots of number-crunching muscle figuring out which products in their inventory to discount to loyal shoppers, personalizing offers and segmenting their most valuable customers.

Soap.com, the online seller of personal care, household and vitamin products, has decided to take another route and simply let registered users pick which items they want to receive instant discounts on.

Introduced last June as a beta launch, the "My 5 Faves" program lets users designate a single product in each of up to five of its product categories as a favorite. Starting with their second vist, they can then receive a 10% discount on that product every time they buy it from the Soap.com ecommerce site.

Like any shoppers at the site, users must first set up an account with Soap.com before picking their designated discounted products. They can then begin redeeming those discounts the second time they log in to their account and shop on the site.

Buyers must apply the discount to only one product in each of Soap.com’s product categories, which also include hair care, skin care, bath and body, fragrance, diet and fitness, men’s products and sexual wellness. Once they've selected their first five favorites, entering them at the account administration page, they must also wait 90 days before choosing new items to enter into their "My 5 Faves" list.

To maximize impact, Soap.com allows customers to combine their 5 Faves discounts with any other rebate offers the site may be running at the time of the purchase. The five discounts can be applied to any one of the 30,000 SKUs currently offered on the site, as long as they’re in different product categories.

Since its launch in summer 2010 by ecommerce operator Quidsi.com, Soap.com had planned to roll out a program to reward returning customers for their shopping loyalty. Rather than including such a plan at startup, the site opted to get an overview of users' buying habits and to poll them on the kinds of rewards they'd find most valuable.

Those polls revealed that what Soap.com customers would appreciate most was instant discounts. "Loyalty has been typecast as a cash-back or rewards program, something where you obscure the value at some point of what a person is getting back," says Teju Prabhakar, Soap.com director of marketing. "We liked the transparency of the instant-discount concept. People know what they’re getting each time they come back to the site. We wanted to avoid the earn-and-redeem construct and create a program that was easy to explain to customers."

An internal goal of the "My 5 Faves" design was to get customers more acquainted with the broad range of product categories offered at the site. "A lot of our purchases are concentrated in the household and personal care segments," says Prabhakar. "We saw this as a way to introduce customers to the idea that while they may shopping for their paper towels and laundry detergent at Soap.com, we also carry a huge vitamin assortment, hair care and fragrances. We know you’re probably shopping elsewhere for your favorites in those other categories right now. A 10% discount for those same products is a powerful incentive to consider buying them at Soap.com, increasing your average order size with us."

Letting customers tailor their own portfolio of rewards offers also takes advantage of the tracking advantage that ecommerce has over store retailing. "The great thing about online retail is that every time they shop, you get data about your customers," says Prabhakar. "You can personalize the items they see and remember what they actually chose. We let you choose what you want to save on and then change your selection after days." That’s an advantage brick and mortar can’t easily match, he says.

The program is promised to continue at least through next June. Prabhakar says efforts to publicize My 5 Faves have focused on existing customers and have comprised including news of the program in customer emails, on box inserts and on the Web site. He says that initiative has already enrolled more than 15% of the "active shoppers" on Soap.com.

The site has been increasing its product offerings steadily since it opened its doors last year with about 25,000 SKUs. The company expects that inventory to include 60,000 SKUs by the end of this year.

The company hasn't ruled out extending a similar type of customized loyalty offering on some of its other ecommerce sites, including Diapers.com, BeautyBar.com and the newest one, the Wag.com store for pet needs. But differences in site use and user experience probably prevent a simple transfer of the concept to those sites. "There's a different dynamic for sites that see a lot of one-off purchasing [such as high-end cosmetics seller BeautyBar] versus sites that have mostly replenishment shopping and have inventory spread across a lot of categories," says Prabhakar.

He points out that the Diapers.com site recently launched a "Take Five" loyalty program that gives registered users $5 off every time they buy a case of diapers.