Marketer Studied: Vol 2. Insights from Orangetheory’s CMO

Meet Dave Sims

Welcome to Marketer Studied, where each week, we sit down with a marketing leader to learn more about their careers, insights and accomplishments. 

This week, that marketing leader is Dave Sims, CMO of Orangetheory and one of few marketing executives with a degree in electrical engineering. Dave went from being a Navy diver working on nuclear submarines in Pearl Harbor to a marketing leader in retail, fitness, hospitality, and CPG.

Here are the need-to-knows about Dave: 

• He relaunched Nordstrom Rewards to The Nordy Club, which contributed 56% of the company’s $15.5b revenue in 2018 and was featured as a top five loyalty program in the U.S.

• His revamp of GNC’s loyalty program prompted the CEO to say on an earnings call, “I haven’t seen us transition a program as effectively or quickly to get to a more even week-to-week type basis of business than I’ve seen this time. It usually takes a year to filter through.”

• At DSW, his program relaunch raised retention rate by 5%, grew spend per active member by 7%, and grew the program’s contribution to company sales by 5%.

Lessons in loyalty programs 

Clearly, Dave has a superpower when it comes to loyalty programs. So what does it take to build one that moves customers up and to the right? Dave says high quality data and internal advocacy go a long way. 

“I’ve always been intrigued with the experiential piece. If we know that you're a Nike shoe person, we can tell you that Nike’s having a new shoe drop. And I can tell you instead of the people who wait to get those from resellers. It sounds easy to do but it takes a lot of work at the stores, which are always saying “Hey, is this really worth it?” So it's a lot of internal selling. I learned back in Procter and Gamble that it's not self promotion, it's promotion of the program—to show what it's doing for the company, to show that it's adding value. Because there is a cost to it. 

It's really about how good the data is and how much you’re doing when you're running those programs. Are you making friends with a CFO? Are you making sure you've got the analytics that are really showing the value of the program at the end of the day? Programs are rooted in retention and engagement. So it's more about that than anything else.

But what about the companies who don’t have the infrastructure to build a full-blown loyalty program? What can they do? 

“I think far too often, there's no budget for existing customers. In the fitness business, we say retention is up to the coaches. Show folks a good workout and treat them well. But if they take their hundredth class, put up a sign or a picture saying congrats on your hundredth class. You have to show love to the people who are showing you love. And it doesn’t have to be a program—but you should have the data to know who those people are because they're probably already up and to the right. And you should start figuring out how much marketing money you can spend on rewarding or changing those behaviors. 

The minute there are points and you have to start accounting for accruing those, that’s where the cost comes in. But I think you can make something feel like it's a program without doing that level of work and get the same benefit from it.”

A standout campaign

Of all the impactful loyalty work Dave’s led throughout his career, one stands out among them. 

“When I got to GNC about 10 years ago, they had a Gold Card program where you’d get 20% off everything the first week of the month. You can see the logic—as a supplement company, everything people buy is usually a 30 day supply. But if it's the first week of the month, you could have bought a new multivitamin in week two, three, or four, and we wouldn’t know. 

We wanted to build a CRM communication program, but first we had to create an everyday program. The entire GNC business ecosystem was based on 40% of the business happening in the first week of the month. So we tested the heck out of it and established an everyday program that gave people a reason to tell us who they are every time they shop—a huge step. Then, I could say, “It feels like you should be out of that multivitamin you purchased 30 days ago.” 

From there, we partnered with dunnhumby to look at our marketing data and they showed us important insights about our mailers. At the time, we talked to people in two ways: sports or wellness. If you were in the sports category, you were shown images of a bodybuilder. If you were wellness, you got images of a woman doing yoga.”

So we came up with seven different personas, as opposed to the two we were using prior, and we sent 2 million mailers a month featuring the new personas. We gave coupons but not the blanket, everyone gets 10% of a $50 order—we had different coupons that were a stretch goal for your basket size. We’d show you what you already buy and the next, most-likely thing you're going to buy. We shared articles based on what you already take or what you should be taking. There were seven points of relevance in this thing and the permutations of all that were no two mailers were the same, out of the 2 million we sent—true one-to-one marketing. It was super impactful at the time and it felt like we were groundbreaking.”

Advice and takeaways

Dave’s insights, career, and accomplishments offer a lot of learnings. Here are a few:

1) Data-Driven Personalization

Dave emphasizes the importance of high-quality data in creating effective loyalty programs. At GNC, he leveraged data analysis to develop seven distinct customer personas, moving beyond the simplistic sports/wellness dichotomy. This allowed for highly personalized marketing communications, with each mailer tailored to individual customer preferences and behaviors.

As a marketer, you can apply this by investing in robust data collection and analysis tools. Focus on gathering detailed customer information and purchase history to create more nuanced customer segments. Use this data to personalize your marketing messages, product recommendations, and offers, ensuring each customer feels understood and valued.

2) Internal Advocacy and ROI Demonstration

Dave stresses the importance of internal selling and demonstrating the value of loyalty programs to key stakeholders, particularly the CFO. He highlights the need to show how these programs contribute to the company’s bottom line, as there are costs associated with implementing and maintaining them. To apply this in your organization, develop clear metrics to measure the impact of your loyalty initiatives.

Regularly report on key performance indicators such as retention rates, customer lifetime value, and program-driven revenue. Create compelling presentations that showcase the ROI of your loyalty efforts, and actively engage with finance and leadership teams to secure ongoing support and resources.

3) Flexible Approach to Customer Appreciation

Dave suggests that companies without the infrastructure for full-scale loyalty programs can still effectively show appreciation to their best customers. He recommends identifying and recognizing top customers through simple gestures, like acknowledging milestones or providing special treatment, even if it’s done in an informal way at first.

You can implement this by creating a tiered system of customer recognition, even without a points-based program built out. Use your existing customer data to identify your most valuable clients and develop cost-effective ways to make them feel special. This could include exclusive access to new products, personalized thank-you notes, or public recognition of their loyalty. Remember, the goal is to make customers feel valued and encourage continued engagement with your brand.

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