Sometimes a story is just too good not to be told, and rewards app Drop, which has taken the millennial shopping market by storm, is one of them. Impact’s Richa Dani, Director of Strategic Partnerships, asked Drop’s Matt Himel, Head of Business Development and Partnerships, to share some of the secrets to Drop’s success. Take a look at how Drop personalizes to its specific markets, delivers outstanding ROI for its partners, and so much more.
Richa Dani: Drop is no ordinary rewards app. As Techcrunch eloquently described Drop’s unique approach, “Drop uses banking APIs to read your credit card transaction data directly, and gives you points for making purchases with partners in their program. These points can then be spent on personalized offers.” What else is unique about Drop vs. your competitors?
Matt Himel: When consumers sign up and link their debit and credit cards, they provide Drop with a 360-degree view of their online and offline spend. Most competitors only see “qualifying transactions,” that is, transactions when their customers spend with an approved partner. With a 360-degree view of spend, Drop is able to provide our members with offers that are personalized to them and our merchants gain the ability to target consumers that are interested in their products and services. It’s truly a win-win.
Richa: CEO and cofounder Derrick Fung originally created Drop in order to prove that fans at concerts were spending more on the brands that sponsored an event—and it quickly grew beyond these parameters. Did this happen organically or was there an event that prompted this growth?
Matt: Derrick sold his last company, Tunezy, to SFX Entertainment and took on a role at SFX in New York. During his time there, he realized that there was a gap in the marketplace for marketers who were trying to reach a millennial demographic but also wanted to measure the impact their marketing initiatives had on them. For instance, a company would set up a large activation at a music festival to engage with young consumers, but had no ability to measure their return on that investment. Drop is helping to solve that market inefficiency; instead of buying an expensive display ad, why not target consumers who already love products and services similar to yours, while also being able to track past and future consumer spend to determine the actual return on ad spend?
Richa: Drop rewards users with points for partner brand purchases. When users collect enough points, users can claim gift cards. How do you decide upon partners that offer gift cards? Do users make requests for particular brands?
Matt: We offer a wide variety of gift cards to appeal to our broad member base. We get a lot of requests to add new redemption options from both members and merchant partners, and it is definitely an aspect of the business we are investing in through 2020. We want our members to earn Drop points because of the aspirational redemption opportunities that exist in-app. We’ve found that points are more engaging and drive higher retention than cashback, and we’ve been effective at using points to incentivize video views, surveys, contests, and even donations that help drive brand awareness.
Richa: Drop was built on a foundation of partnerships with brands, and that’s where its power lies today. What brands were your earliest partners? How are they different from your partners two years later, and why do you think this is?
Matt: Early partners included Casper, Boxed, and Jet.com, all companies who were willing to test out our model and help us to refine our approach to advertiser partnerships. Today we have more than 300 partners, and with each new partner, we learn something new about how we can assist direct-to-consumer brands and more traditional retailers learn more about their consumers and provide more value back into their pockets.
Richa: With Drop’s great partnership expansion and increase in user adoption, how do you manage your partnerships effectively?
Matt: Early days, our core business development team was made up of generalists who would tackle every aspect of the business, from sourcing and on-boarding new partners to invoicing them at the end of every month. As we scaled, having a team of generalists became less efficient, requiring us to jump from task to task. Now, we have a team of specialists who are directly responsible for sales (account executives), account management (partner success) and advertising (partner marketing). The shift has been one of the key success factors in our 2019 accelerated growth.
Richa: How do you typically work with brands on Impact? Can you outline the process?
Matt: Often times we’ll source new partners (outbound or inbound) who already use Impact, making it really easy to integrate for online sales. Alternatively, we work directly with Impact who helps us to source partners they think would be a great addition to our network. Working with you and other Impact team members has been invaluable, as they truly understand what Drop is trying to accomplish and help us to identify and build powerful partner relationships from the ground up.
Richa: Does Drop use deep linking? What kind of differences did you notice in user experience and thus user acquisition/retainment?
Matt: Generally, we’ll direct members to our partner’s mobile web experience. We use deep linking when running partner marketing campaigns and there is an appetite to highlight specific offers, products, and services.
Richa: Drop is a Canada-based company that expanded not too long ago into the United States. How does millennial adoption of Drop vary between the two countries? Are there brand verticals that are more popular in one country than another (fashion v. big box, for example)? Why do you think that is?
Matt: We’re extremely proud of our Canadian roots and consider ourselves in unique territory as far as successful consumer apps that have launched in Canada and reached this level of engagement in the United States. We’ve found that the increased competition in the U.S. ecosystem has helped us to differentiate ourselves from a discount or savings platform for penny pinchers, and more as a shopping app that rewards you for spending with companies you already spend with and for discovering new brands. That differentiation definitely resonates well with a lot of our partners who tend to shy away from cashback or discounts. Partner performance is fairly similar across both countries (aside from the United States being a 10x larger market) but we do see some dropoff when retail partners don’t do a great job shipping to Canadian customers.
Richa: How do you ensure you drive incremental revenue for your advertisers?
Matt: Drop’s unique view of transaction data, among other things, allows us to segment our member base into merchant/brand loyalists, independents, or competitive shoppers. By providing our advertisers with the ability to target different segments, they have the unique ability to spend their marketing dollars more effectively, and we provide insights into how different consumer segments perform, including incremental spend.
Richa: The card-linked offers market has exploded in the last few years. What do you think is the biggest threat to your industry? How do you continue to stay relevant?
Matt: As more marketers begin to learn about how companies like Drop can provide true online and offline attribution for their marketing dollars, they’ll continue to shift spend away from marketing initiatives that are extremely difficult to measure and spend more in verticals where their budgets are held accountable. There will always be a market for Super Bowl commercials and Times Square billboards, but if I’m a brand with X budget, and I know Drop can deliver a truly measurable return on ad spend, we see that as a compelling reason for continued industry growth.
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