EPISODE 065 : 06/09/2022
Dan Fairbanks is a visionary entrepreneur working to fundamentally change how local retail and e-commerce businesses work. He has started more than seven companies, including a running store chain and an e-commerce marketplace. Dan is on a mission to educate small retailers on the core changes they can make to thrive in business and in life.
Host: Ned Hayes and Ashley Coates
Guest: Dan Fairbanks
Listen to every episode
Topics discussed in this episode
- Detailed small business insights from Olympia, Washington
- Small business resiliency and adaptation during COVID
- Doubling community outreach during the pandemic
- Opportunities for small business loyalty programs
Watch Spark Loyalty’s Small Business Success Channel
Ned Hayes [00:00:01] Welcome to Spark Plug, where we talk to smart people working at the intersection of business and technology brought to you by SnowShoe, your smarter loyalty leader.
Ashley Coates [00:00:15] Today’s Spark Plug is happy to welcome Dan Fairbanks on the podcast. Dan is a visionary entrepreneur working to fundamentally change how local retail and e-commerce businesses work. A serial entrepreneur, he has started more than seven companies, including a running store chain, an e-commerce marketplace and the point of sale software company. Dan is now on a mission to educate small retailers on the core changes they can make to thrive in both business and in life. Welcome, Dan.
Dan Fairbanks [00:00:42] Thank you. Happy to be here.
Ashley Coates [00:00:43] Yeah, we’re excited to chat with you. Well, let’s start off with the fact that you are a serial entrepreneur who started many different companies. Can you talk about the nature of a lot of these companies? It sounds like many are in the retail space.
Dan Fairbanks [00:00:55] Yeah, many are either retail or technology. Although one of my first businesses was teaching wakeboarding, which is one of the funniest things I’ve ever done, was teaching wakeboarding with my brother for a summer. So I also love teaching. I think that’s just something I love to do. I love to give, I love to teach. And then after I graduated from college, I had a shaved ice stand, which was just a lot of fun, taught me a lot about business and hiring. And then I opened my running stores in Seattle called Border Run, and if anyone’s read the book Born to Run was inspired by the book. And we had Barefoot Ted as a minor co-founder in the store and and the author’s permission to use the name. And so we built a reputation there and I really enjoyed being in the retail space and selling running shoes to people who love to run and wanted to get better at running and even became really good at teaching people about running form and the proper ways to run and all that. So again, teaching, which is why it circles back around. And then I became passionate about small retail and I love now trying to work with small retailers of what I can teach and give. But while I have those running stores, I also realize that I felt as a small retail owner, my ability to meet what I felt like was what the customer really wanted was difficult for me to do with the technology that was available. So between the point of sale system and e-commerce, which didn’t talk to each other and marketing efforts, which everything was just different systems in different ways and tracking our customers, it was difficult to really put together what I thought was a totally coherent, well put together all in one way of serving my customers the way that I really wanted to. And then we piecemeal our own stuff together with a certain level of success. It left me wanting, and that’s actually what led to Xion, is I wanted to build a much better system, really thinking about how retailers run their business and how they interact with their customers and what their customers want from small retailers. And I didn’t just take all my ideas and build what I wanted. I went and talked to eventually hundreds of retailers validated what they wanted, what interested them most, what problems they had to make sure that I was building things that they wanted. We talked to their customers as well to get an idea of what they want. So that’s back on there somewhere in the middle there. I also just built a few apps on the side and had a company that just had apps that had nothing to do with retail that I threw up in the App Store as I learned how to code and became a developer myself so that I could build a software company. So that covers a lot of the businesses that I’ve done up to this point.
Ned Hayes [00:03:17] Great. Dan, you mentioned that some of your startups have had something to do with retail. So what got you into small retail and independent retailers?
Dan Fairbanks [00:03:25] That’s a good question. I think the story is going to go back to when I was in college and I studied business and I studied entrepreneurship and then retail was something that comes up as a business that you look at sometimes. But really when I was in college, I played rugby in college, but eventually my last year of college I wasn’t able to play rugby anymore. I was ineligible. So I got into running and then I hurt my knee running because I didn’t know I was doing. And I read the book Born to Run and realized that if I ran barefoot or a minimalist shoes or beaver, five fingers or the toe shoes that I might be able to solve my pains while running combined with good running form. So if I combine the shoes with a good running form, then I might be able to run. And I did. And I ran a half marathon. But where I saw the problem was is really hard to find, even five finger toe shoes at the time. And I had to order a pair from the East Coast from a small shop and call them and it was all over the phone and I saw that there was a market for this and I wanted to create an e-commerce website that sold minimalist running shoes like the five fingers and started talking to be run by fingers and other shoe brands that made minimalist shoes to open up a ecommerce store. And some of them would let me do it just on ecommerce, but most likely were like five fingers like, No, you have to have a brick and mortar retail or We just won’t give you our products. You can’t become a dealer. And I was like, okay, let’s do it. Let’s go for it. I saw the opportunity. I’m like, I’d love to work with customers in-person too. So that’s what got me into opening up my own store initially, and this is in Bellevue, Washington. And then after about a year, we opened a second location in Seattle and downtown right by the big flagship REI, which was a great location for us. So that still got me into retail. I always wanted to do business. I had a lot of different. We’ve talked about my entrepreneurial background a little bit already with other stuff and that to me I saw an opportunity and I wanted to be part of it.
Ned Hayes [00:05:10] Right. Well, it sounds like you’re on a mission to create a world where small retail can be remarkable and that operating a small retail business could be low risk and profitable and even fun. So do you have any keys to the mission? What’s the key to creating that kind of world for retailers? Yeah.
Dan Fairbanks [00:05:28] Well, one is believing in it. You have to realize that there’s a level of competitiveness, if you will, between Amazon and the big retailers and small retail. But there’s also these gaps, things that big retailers and Amazon just don’t do well and will never likely do well. And those are the opportunities for small retailers. So small retail, ma & pa retail, mainstream retail, whatever you want to call it, it’s been around for a really, really long time and it’s had its challenges throughout its history and maybe not as challenging as the Internet age. And part of that is, is the way that retailers have just kept doing what they were doing and not adopting to what customers want. And that’s why it’s an opportunity. When you talk to consumers and what they’re looking for and what their needs are. There’s a lot of opportunity and you get to a place for sure they love shopping Amazon and the quick shipping, but then when it comes to certain types of items, they want to talk to a person, they want to touch it, they want to feel it, and they want a community around it. Those are really important parts of what a small retailer can provide that big retailer, especially ecommerce only retail, doesn’t. And then on the flip side, you have this opportunity for small retailers to play in the online space with a lot more ease than they’ve ever been able to in the past. They have this inventory, if you think about it statistically, if you look at all the retailers, let’s say bike shops as an example, whatever you’re looking for in the biking industry, it’s probably on a shop relatively close to you. If you just knew where it was, you can either go get it quickly or it could ship to you from there very quickly, maybe even same day delivery. That’s a very statistically plausible scenario that they cover most scenarios of what I’m looking for, this type of product, and you can take that out into almost any industry where specialty retail plays a major role. When you solve for that and you make it convenient for the retailer and you make it convenient for the customer, then that’s where the magic starts to happen. And then the retailers are able to, instead of losing out to Amazon, they actually beat them because they’re like, I can get this product to right now today. I mean, Amazon is doing same day delivery in some place, but when it comes to certain products, they don’t sell them on Amazon. So you can’t get that experience on Amazon because you just can’t get those products on Amazon. But the customer still wants that. If they can get it, they still want that same day or next day delivery if they can have it. So those are some of the opportunities that I see that can be solved with technology.
Ned Hayes [00:07:55] Right. So I believe you’ve also said that technology can make a difference for retailers and can help them compete. Just now you spoke about the difference between Amazon and other retailers. How does smaller retailers use technology effectively?
Dan Fairbanks [00:08:09] There’s a couple of different ways that they can use technology effectively. The one I was talking about there is making e-commerce so simple that they really just need their inventory plugged in and online and being advertised in a marketplace that’s helping them make those sales so they don’t have to learn. E-commerce is like a whole different business. You have to understand so many things and the nuances and then you got to figure out, even if you get your store up, you got to figure out marketing and that part is hard. So our first product design is its e-commerce marketplace. It just it’s an easy way to get online, we do the advertising, we take a cut because we’re doing a lot of work. But you’re playing in the space, you’re getting enough margin out of it as a small retailer that you’re making good money. You’re also getting new customers. And you’re satisfying even local customers who want to do curbside pick up or just know what your inventory is. We have automated marketing that sends out emails on a regular basis saying, Here’s what we have in stock, here’s what’s going on. And so just thinking with those things in mind of how do we keep those touchpoints with customers so that technology that we built allows them to do that. So that’s one. Another one is and this is a pretty exciting thing for us right now for any retailer who does service, so a bike shop, ski shop those are really two big examples but there’s a lot of different other retailers who might do some sort of service. We built a service tracking software if one is familiar with Trello, and it’s a lot like Trello and it’s built as an iPad app that allows them to digitally take in the service ticket from a customer and say they’re working on a bike, get all the customer’s information and what work they’re going to do on the bike, maybe parts if they need it, take that in and then they track it along this board for a backlog to progress to complete. Now that’s great for the retailer to be able to digitally track this, have all the records, but what’s even better for the customer is that when they move the card, if you will, the work order ticket from one column backlog to in-progress and then in progress to completed that automatically pops up a prefilled text message that you can just send to the customer to let them know, Hey, your bike’s finished, ready to be picked up. And then that’s combined with a full on basically, it’s a remote the it’s like iMessage, just a custom built version of that where the business can text message with the customer back and forth as much as they want. So even if they’re having questions along the timeline of working on the bike, they start working on the bike and there’s a problem with it. And they realize that they need to get a new part, like a text message to the customer say, Hey, we need to get this part in order to fix it. It’s going to cost as much. Are you okay with that? They can have that conversation via text now, and that’s what customers want. They don’t want a phone call. They don’t answer the phone when someone calls or they don’t know. Most of the time they don’t answer. And if you leave a voicemail, they might not listen to that either. And then the service texts don’t particularly love making those calls anyway. They need to be spending their time putting bikes together, not making calls where this is just they literally just hit one button. They’re done with that work order ticket and they can just move on. Working on the next bike or if it’s skis, would be a really good example to just do something with skis. And that’s created such a fantastic user experience on both the retailer and the customer side. So text message is a technology that both sides want to be a part of more in our system, our work order tracking system enables it enables it, particularly for service based, but you can use it for just text messaging with customers. We we have plans to do more of that too. And you can start adding in marketing or automatic reminders that get your bike tuned up after it was tuned up a couple of months later. Hey, here’s a reminder to tune up or maybe it’s a follow up on How’s it going with it? But we just did that tune up a week ago, is everything going well now? If not, bring it back in. Customers love that level of interaction and they like the text. You can always make the phone call and that’s good to not discourage that, but it allows for a lot more time sensitive automation of that and that creates a much better experience. So those are two examples. We also have a point of sale that is in the marketplace, but it’s getting better. It’s not the most full featured point of sale. But let me think about those things too, about the user experience on the retailer side and the customer side, the marketing, the text messaging, all that kind of stuff. And there’s a lot of opportunity there, I think, with data to help retailers understand their key metrics that most don’t really realize they should be paying attention to. But if they did, they can run their business understanding the numbers better and what levers they can pull to get better results in their business, to get more customers, to track marketing, to understand the things that really matter most, that help their business succeed. So we have plans to do a lot more with that. It’s almost like a type of business intelligence, if you will, breaking that down into more simplified form. So those are three. And then I’m going to throw in the last one and this is actually a separate company we’re working on where it does vendor managed inventory for small retailers. What that means is let me step back just a little bit. So vendor manage inventory is something that Wal-Mart does and big box retailers do, grocery stores do this. And what that means is it’s the vendor. Whoever is selling the product is actually the one who manages the inventory at the individual retail stores. You might see an example of this if you’re at a grocery store and you see someone in a Pepsi shirt stocking Pepsi products on the shelf, they’re not an employee of the grocery store. They drove up in their Pepsi truck and they put Pepsi products on the shelf because they’re in charge of making sure that store stays fully stocked. So it’s existed for a long time, nothing like that has really existed at the retail level unless you consider consignment the same thing and it’s not quite the same thing, but it’s a similar thing that has been done but with poor or no technology involved. So what we came up with was a system where the brand would have the ability to have visibility into the inventory levels of their products in different stores and could control that inventory send products to the stores. It’s kind of an agreement with the store, with the retailer of like, okay, maybe you can have X amount of total products or you can have and kind of control this part of the store to split up as much as you want. There’s different ways to come to that agreement between the brand or the retailer. You’re saying, Hey, brand, you’re in charge of that now. I’m not going to do the buying for you anymore. You’re going to make sure that my products are stocked. And then for the retailer, one of the great benefits is besides having fully stocked products all the time, the retailers have to pay for those products too, till the product sales sells to the consumer, at which point the brand gets paid their cost and the retailer gets paid, and that allows the retailer to not have to worry about inventory financing. In fact, that’s an immediate gain right back to them. They had at 100% better manage inventory in a store. Now they don’t have any inventory on the books. They don’t have to have a loan and most of them do it on credit 30, 60, 90 days credit with the brand. So in some ways the brand’s already paying for it until it’s bought. But that system is very, in my mind, backwards. It was what they could do with old technology, but new technology, we can just say, Hey, this product sold and we can just send the money to the brand and the retailer gets their cart and we can control that flow and we can do it with third party systems as well as Xion, which I guess is third party, because this is a new company that we’re creating. It doesn’t exist yet, but we have about 160 retailers signed up to use it and 65 brands who are committed to doing this once we have it launched. So this type of technology completely changes the whole dynamic of even how retailers and brands interact. What the retailer can offer them means they can offer more products so they can be deeper stocks. They can have more variety of products from more brands because they’re not thinking, I can only carry so much inventory risk. They’re like well I can carry more as much as I can fit in my store. And then for the consumer, that’s great, because that means when you go to a local shop, you’re more likely to find what you want because their better stocked. And that’s a big benefit to the retailer. And then you can expand that to online as well. It’s like, well, now these retailers are better stocked and people can find it online and all that kind of stuff. So that’s the last piece of technology that we’re working on that would help bring it all together and create a completely different system for how brands and retailers interact.
Ashley Coates [00:15:55] Thank you, Dan. That’s fascinating to hear about the solution that you’ve developed. Going back a little bit, I know that several years ago when you realized that you did have a passion for wanting to help small retailers, it sounds like you decided that the best way for you to do that was to learn how to code. And you’ve proven since then that that was indeed correct. But why at that time did you think that that was the best way that you could help small businesses?
Dan Fairbanks [00:16:18] Having my own stores, I wanted to have confidence about building a tech company. And if you just go talk to a coder and they start giving you all this information about what they might do, it’s a little overwhelming to me, even in my hiring a good coder whom I really working with and some people are able to do that. They don’t know anything about coding and they can still start a tech company. But in that case they usually have a co-founder who is highly technical. Somebody in a leadership role who’s a major player in the beginning of the company is technical. I decided I didn’t really have a network of someone that I was confident in that I could work with, that was technical, that could be that person. So I decided to become that person myself. So I was like, All right, I’m going to go to a coding bootcamp. I’m going to learn how to code. I’m going to immerse myself in this enough that I understand what it means to build technology and how to work with coders, how to evaluate how good they are, what systems and processes we use to do good work, all that kind of stuff. And I’m super glad that I did because that really did give me the confidence I needed to do exactly that and ended up enjoying it. If anyone’s interested in coding, it’s just it’s a lot of problem solving and if you love solving problems and doing math and there’s so many different types of coding, but it was a lot of fun. It’s not something I want to do with all my time every day anymore, but for a period of time I enjoyed it.
Ned Hayes [00:17:33] What’s your outlook on technology in retail right now? Have you seen that small retailers are beginning to really adopt some of the things that you talked about previously, the e-commerce marketplaces, the advanced ways of using technology to improve their businesses?
Dan Fairbanks [00:17:48] Yeah, COVID accelerated that for sure. So as we talked to customers before COVID, they definitely were interested, but it was more like a lot of them had a But I don’t want to change what’s working right. Like this is how I run my business and so maybe I should do it or it was enough to get sales. But when COVID happened and they realized I might not be able to open my doors for a while, I might have to meet the needs of customers who want to shop online or do curbside pick up, and they just had to adapt, which definitely opened them up to using technology to make those adaptations. Additionally, consumers also learned to adapt to being that they’re more likely to shop a local retailer online than they were before. There’s more people in from a broader set of age demographics willing to do that. Whether it was before, it was a little bit narrower. It just kind of blew the top off of that and opened up retailers like, okay, yes, I need this technology to work in the new world. And now that everything’s open and they’re not necessarily worried and maybe they might close down again, but if even if that never happened, just customer expectation has changed and their mindset has changed, which allows for them to be more open to these technologies.
Ashley Coates [00:18:58] I’m also curious to hear your perspective on how accessible you think technology is for small retailers these days in terms of cost. And then also the comfort level with technology is a thing that only big retailers are able to implement.
Dan Fairbanks [00:19:14] Yeah, that’s a great question. Big retailers invest heavily in technology, often develop their own. A lot of their systems are just built themselves or they might hire a third party to build it for them is completely not affordable for any small retailer. I’ve run into maybe a few who have many, many locations who have some custom software and they’re really ambitious with their growth and they’re opening more and more stores, but that’s super rare. So that makes that kind of customizable technology inaccessible. Right. And so that’s part of where we come in. Why I’m doing all these different things is because this technology is meant to be completely accessible, either at a price point that makes sense or as like a value add for what they’re doing. Or is a win win meaning like when they when we when we sell something online, they make money, too. And there’s enough margin for both of us. That’s really the point. And then the vendor manage inventory and there’s a thing where they built that, that there’s no off the shelf vendor managed inventory software and not even for the big guys, it’s built their own. So we’re creating one that then is accessible to the small retailers because those big retailers. Use that data from everything they get and they create a new customer experiences. And now those customers want small retailers to be able do the same thing. But that’s why bringing this technology to small retail allows them to compete and allows them to then add some other personalization to it that the big retailers don’t have the ability to do as well as a small retailer can.
Ned Hayes [00:20:32] Right. And your tagline on Xion is Shop Independent Local Retailers Online and Support Local Businesses. So how does Xion fit into the market? Do you compete with Shopify or with Etsy or Clover Square. How do you position Xion?
Dan Fairbanks [00:20:47] The answer that would be yes. Shopify is the one that people think of usually right off the top of their head, I go to Shopify and that’s what I used in my running stores. I used to shop. That’s a really great technology for doing e-commerce. The Shopify is what I call a template based e-commerce system. You find a template and then you open a store, the colors you want and your logo and all your products. And then you got to figure out the marketing right and is accessible as Shopify is. Most small retailers and I mean less than 10% are using Shopify or something similar like BigCommerce. And the reason is still too much work. It’s still too much work for them to do alongside what they’re doing because it’s just too much effort. So there’s exceptions where small retailers are using Shopify or they’re on Etsy or they’re sometimes on Amazon even. But that’s rare. That’s not, in my experience, has not been the norm at all. I actually want to put a statistic. I just asked 200 retailers. It was less than 10% at any type of e-commerce. The next thing you’ll find outside of Shopify is industry specific ecommerce solutions. There’s one in the bike space and there’s one in the knitting space, whatever that industry is called. I apologize if I misrepresented it. And so those exist. Still less than 10% of they did this a couple of years ago. So maybe more now just because of COVID. A lot more of them have adopted online of some sort recently because, again, it’s still too much work. And I know because when I had my Shopify store, when I had my running store and a hire somebody full time and a manager, that was their only job. And I had another person who worked half their time in the store and half the time on Shopify. So really on one and a half people working on Shopify, marketing, fulfilling orders, updating things, little thing we sold enough to justify that, but that’s a big commitment for someone to get into and figure out and learn. And there’s been a learning curve. And you brought up the idea of are the retailers able to adapt and learn this technology? Again, making some generalizations. A lot of retailers are older. Above 50 would be a pretty common age. And not only that, because they got into some sort of specialty retail use bike shops as an example, they’re just really into cycling. They often are not into technology. They don’t go hand in hand at all because of what they were into. That’s usually something really outdoorsy or whatever. They’re also can not be into technology, so they just don’t know as much about it. So that means that in order for them to adopt technology, it’s got to be super safe where they know how to use their phone really well because everyone does now. So it’s got to be that easy. And that’s what we designed our software for. It’s either turnkey, meaning they set it up once they’re able to think about it. It also already covers marketplaces like, look, we’re going to spend a little bit of time setting it up. But I mean, 15 minutes being set up a retailer and 15 minutes. And if we have an integration with their point of sale system, that’s it. They’re done. I’ll do anything else anymore but fulfill orders. Think about it. They just have to make sure that when an order comes in, they ship it up. It’s that simple and they’re going to sell it. We worked on it’s an iPad app that feels a lot like an iPhone. It’s just easy to navigate, easy to find out you’re looking for, easy to use. Same with the work order tracking. It’s just meant to be like, Oh my gosh, this is just you don’t to understand technology, it’s intuitive, it’s just easy to use. So I build everything with a deep understanding of who my main customer is, but they’re not super tech savvy. They’re not going to spend gobs of time becoming tech savvy. It needs to be something as simple as their phones.
Ned Hayes [00:24:09] Right.
Ashley Coates [00:24:10] Well, I want to go back to the you said earlier, which is that there are certain things small retailers are able to do that big box stores can’t do. And I think you mentioned one example is where somebody wants to actually touch a product or interact with somebody about that product. Is there anything else that you see is really a huge benefit for independent retailers in terms of what they can offer to their customers?
Dan Fairbanks [00:24:33] So there’s two more things that I haven’t mentioned yet that are a big deal. One is relationships, and then what goes along with that is community. So when you go to a local retailer and you buy from them, often you start to build a relationship. And this is where technology like text messaging and stuff can help facilitate relationship building and skill it because a business owner doesn’t have a ton of time to follow up with every customer, make a ton of calls. But if they could automatically send out a text message or quickly just hit a button and send out some text messages, then those customers feel like you’re following up with them and that you care a lot because you do. You just don’t have the time to make it super personal. But that’s what they have the opportunity to do is build those relationships. And when you have those relationships, you create a loyal. Customer. You create a customer who’s going to tell their friends, you got to go to this place. And what goes along with that? It’s local retailers are experts in their space. So even comparing other types of outdoor stores to REI, REI hires outdoorsy people. But we had our running store right next to REI and we sold primarily minimalist running shoes. REI sold minimalist running shoes too, and they had a lot of the exact same products over there and they had shoe experts over there. But someone who would go over there and ask questions, nuanced questions about getting into running and minimalist shoes. And the REI salesperson would be like, I don’t really know the answers to those questions, but if people came over to our store, we could just get into an hour long discussion about the nuances of all the different things and answer their questions and go into depth. But I hired and trained all of our staff to be those kinds of people. That’s the kind of thing a retailer offers that expertize, allows you to then also build relationships. And then those relationships can go beyond in creating communities. So REI does events and has people speak, but there’s a level of closeness you can get by building community and doing events often out of a local retail store, whether it’s a bookstore, running store, bike shop, we have opportunities to create groups that are there on a consistent basis of getting to know each other. So not just between the retailer and their customer, but customers get to know each other. With our running store, we have running groups, cycling shops often have cycling groups, and then beyond that they often sponsor local events. So they put together and sponsor local events to make sure that people in the area are using the bike industry as an example of the cycling industry. As an example, they put on the races, they create the events, they sponsor local schools that might have a mountain biking team and that kind of stuff, which actually helps the whole industry grow. If you were to take away local retailers, these industries would shrink just because there’s not enough things going on at the local level to grow the industry, to get more customers who weren’t in the industry into the industry. And so ultimately part of what I want to have happen in building these technologies is to allow retailers to instead of thinking about each other competitively, most of them are geographically spread out enough that that’s not really the issue. They’re independent, but they need to what my friend and I called Unite the Clans. So anyone’s familiar with Braveheart. If you can unite the clans and work together in synchronization, we’re all building a bigger industry together, serving our local customers, but also helping each other out. Sharing data. Let’s share data about what’s working. and what’s not working with each other. Then small retailers become collective in a way, and more powerful in a way that then easily in my mind, will eventually beat out larger retailers, whether online or in-store. The combination of both, because they’re now harnessing the power of collective community and collective data to grow. That, to me, is where I want things to go. And that’s why, in my mind, small retail is far from dead. That’s why if we can create that unified ecosystem, then they’re going to create a user experience that not only rivals, but beats out what the big retailers can do. Because everything Amazon does ship same day offer a great online experience. But now you can do everything that I talked about before. Be an expert, build relationships, build community, which they can’t do. Now you’re competing both directly, and then you’re doing things they can’t even consider doing.
Ashley Coates [00:28:42] Absolutely. Well. We also want to get your thoughts on customer loyalty while you’re here. Dan, where does loyalty fit into the small retail space? And also, what does customer loyalty mean to you as a business owner and as someone who works with many independent retailers?
Dan Fairbanks [00:28:57] When I think about customer loyalty, one thing that comes to mind or what might most people might be thinking is about customer loyalty programs. And those are great. You should probably be using a customer loyalty program as a retailer, but that’s really just an additional incentive that builds on that relationship between the customer and the retailer. So when you have a great relationship, you build loyalty. I talked about that a few minutes ago and you don’t necessarily need to extra incentivize that customer to come back. They want to come back because of the relationship, right. Or because of the great experience they have. And on rare occasions, a customer loyalty program might actually be like a negative ROI because they don’t need it to come back, they’re just getting a discount and they would have paid full price. But that being said, in most cases, that extra little incentive, it’s actually just a way to keep them thinking about you, to keep them considering you or when they go to Then finally, if there’s an option to buy something here or there, but they’re like, well, you know, I get a little incentive for buying it here, then it just helps them on those margin decisions made on the margin to just go back to you, because each customer is a little bit different. So some customers are like super price sensitive, meaning not as much as I like you, I will go for the cheapest price. Right. And for those customers, then that really makes a difference. And then there’s other customers are like, I’m going to go where I’m going to have the best experience, I don’t really care what the price is. And so you want to cover those bases, right? So building relationships covers the base that you want, the person who, no matter what, wants the best experience. And that’s where I think retailers truly build loyalty. Price competitiveness is usually the game played by Amazon and Walmart, and honestly, small retailers shouldn’t be playing that game. It’s not a game they should play because it’s it’s a losing game for a small retailer. You just don’t have the scale to win that game. That being said, it doesn’t mean you don’t have a customer loyalty program because there’s still some level of competitiveness with other retailers. You just have to think through what and how and why you’re incentivizing. And don’t forget that the customer experience when it comes to building loyalty is more important than the loyalty program.
Ned Hayes [00:30:53] It’s absolutely key. So are there any loyalty programs that really stand out to you as particularly innovative or useful?
Dan Fairbanks [00:31:02] I don’t think I have enough experiences in that space right now or enough research in that. I mean, I did that type of stuff when I had my running stores, we had our loyalty programs. I researched them more at that time. That was a while ago. And so I’m not really up to speed to talk expertly about what I’m seeing in the loyalty space. As a consumer, I guess I see stuff right. And I think technology plays a role into that. I think sometimes honesty gets in the way, too. I think the best loyalty programs are the ones that I do have to think about. So there is a place that I go to do. It’s when we’re visiting Hawaii to get acai bowls and they use Square and they use spurs loyalty to get ten points and then you can get like a little free shot or whatever. And frankly, I go there anyway because I want the acai bowls and I’m like, Well, thank you for the free shot. They never had to give me the free shot. I mean, it is still nice. I’m like, thank you for it. Like, it feels like a nice little bonus. Every once in a while. And it was nice that it was automated. I mean Fivestar is another one of those types of programs. It’s just like like you just put in your phone number and then it just kind of knows that you came back and it’s not a big deal. I like that as a consumer, but I sometimes think paper cards work better because it reminds you you got this little thing and you’re like, Oh yeah, one more punch and I can get a free thing or whatever, right? Or discount.
Ned Hayes [00:32:14] People like the tactile, physical element of having something in the store because you went into a physical retail store more often than not, and that’s actually what we found interesting. At SnowShoe, we provide something that is actually physical and tactile. It’s a physical stamp that duplicates that kind of punching a card thing and retailers love it. So I totally agree with you that that tactile relationship with your loyalty system really matters.
Dan Fairbanks [00:32:36] Yeah, exactly. And the just the tangibility of that actually, I think gets more results. I don’t know the statistics. I’m not in that loyalty space and understand it, but everything is going on. So that again, I’m only speaking from experience as a consumer and then kind of bringing in my old experience as a retailer.
Ned Hayes [00:32:52] So what about the future of retail? Where are we going to be in 5 to 10 years if you could gaze into your crystal ball?
Dan Fairbanks [00:32:57] Yeah, if we can unite the clans, we can bring all the retailers together, simplify the technology so that it’s easy for them to adopt, break down the barriers of thinking competitively between small retail and say, hey, all small retail do you know who are enemy is. It’s not each other, it’s Amazon. Amazon’s our enemy. Wal-Mart’s the enemy. We are not each other’s enemy. We need to unite the clans. That’s where I would like to see the future of retail small retail go. And ultimately, if you combine all small retail together, it would be collectively bigger than those retailers, while retail aggregate does more volume and sales than those retailers. And so again, I see this opportunity where we can both compete directly with them through the technology, meaning we can provide the same experience that someone will get on Amazon when it comes to shipping and getting something quickly and having a good online experience as well as then the advantages they already have of being experts and creating relationships, building community and having stuff that they can come and touch and feel. And so I would love that’s where I want to see retail and small retail in the next 5 to 10 years. Let’s unite the clans. Let’s come together and let’s start brands and do that next to that’s the way I was talking about with the vendor manage inventory brands, play a key role in the consumer’s mind of product. People have brand loyalty, they get into brands. And so brands create this marketing effort that does drive people the stores, and yet they have this tug and pull between brands and retailers of the brands just selling to the retailer. They don’t sell them to the end consumer. I mean, they might sell directly online, but then they’re just kind of like, okay, retailer, now you’re on your own. Good luck. I hope you sell everything we sold to you and told you would sell. But by bringing the brands into the picture to me, like a new brand, you get paid when it sells to the consumer. You make sure it’s stocked. You make sure you’re you’re seeing all the data so you know what’s selling and when so you know what to order in the factory. And so you can get more. And the real time that actually pulls the whole industry together to create ultimately a better experience for everyone. The brands win, the retailers win, and the consumers win in that scenario. So when you think holistically that way, this technology can provide the avenue for all that to happen. And some of it just starts with the little pieces of technology that we’ve been building in already talked about some of the stuff that’s going to happen in the future.
Ashley Coates [00:35:08] Well, thank you so much, Dan. This has been such a great conversation. We do have one last question. Were you, which is what do you want your legacy to be? What do you want to be remembered for?
Dan Fairbanks [00:35:18] It’s a great question. I mean, less so about me and my legacy. And if people talk about me, great. But that’s not my personal goal. I would love to see that vision come to pass that I just explained. And if people go in and go, Oh, here’s the role that Dan Fairbanks played in making sure that came to pass as a visionary who saw the opportunity and put pieces and things in place to make it happen. That would make me feel really good. But it’s less about me and just actually really wanting it to happen. I want this to come to pass and whoever wants to get involved can help make that happen and play the role. And the more the merrier. That’s what I think.
Ashley Coates [00:35:50] Wonderful. Well, thank you so much for joining us today.
Dan Fairbanks [00:35:53] Yeah, I’m so glad to be out here. Appreciate it.
Ned Hayes [00:35:58] Spark Plug is a wholly owned property of SnowShoe all content copyright 2021 Spark Plug Media.