Gilt Groupe CMO cultivates audience
For David Zucker, it's simple really: Marketing is about solving a customer's problem. A seven-word summary of his marketing philosophy. It's clear, clean and, most of all, efficient. As chief marketing officer of Gilt Groupe, Zucker employs a data-driven approach that allows him to streamline the luxury e-commerce retailer's marketing.
"We've used very targeted marketing, primarily through a referral network," says Zucker. "The way Gilt's acquisition program has been able to scale so effectively is we go after specific types of individuals and then ask those individuals to refer people that they know who would be interested in the kind of product that Gilt has."
That word-of-mouth acquisition system is at the heart of Gilt Groupe's growth from 15,000 members at launch in November 2007 to the now 3.5 million who receive daily emails announcing the online sample sales that start every day at noon EST. He expects the company to do more than $400 million in revenues this year "and we're only three years old." Zucker says that the referral system converts members to customers 50% faster than any of its paid advertising, such as search and display.
He admits that Gilt's marketing approach is unorthodox, but reasons that "we're not trying to be mass, we're not trying to be out there for everybody." That precise approach meshes with Gilt's exclusivity theme.
From the outset, fashion suppliers partnered with the company to offload excess inventory because they were able to do so discreetly. Because the site is closed to nonmembers, search engines are unable to crawl its product pages, allowing a high-end brand like Helmut Lang to offer a $1,000 blazer at half-off without any hit to its brand's elitist image.
Gilt Groupe remains digitally focused
Mobile has become increasingly relevant to Gilt Groupe's business with 20% to 25% of revenue coming from mobile devices, says Zucker. It has developed apps for iPhones, Android and iPad devices. In March, it launched a mobile-optimized website.
Gilt Groupe's Facebook page has served as a valuable member acquisition tool. Zucker says that the company previews sales an hour before they go live to incentivize consumers to become Facebook fans and eventually members.
Email remains Gilt Groupe's bread and butter when it comes to delivering sales to members. Zucker has endeavored to reinforce its relevancy with a personalization process nine months ago that he says has resulted in a 7% to 12% lift in revenue per email.
Preserving that exclusivity poses a challenge as Gilt Groupe expands. In just two years, Gilt Groupe has added new daily deal sites, each aimed at a different luxury niche: Jetsetter, a travel oriented site; Gilt City, exclusive to select metro areas; Gilt Man; and home décor site Gilt Home. This summer, it will launch its first full-priced site, selling men's apparel. Maintaining focus across those verticals is a juggling act not altogether foreign to Zucker, who balances a career in New York with a family in Austin, Texas, and an Ironman triathlon schedule that takes him across the country. He commutes to Texas every other weekend, and puts in 15 to 20 hours worth of triathlon training a week, waking around 4:30 am every morning for the first of two workouts he'll put in that day.
The 43-year-old says that segmenting his time allows him to devote optimal attention to each. Illogical as that may sound, his experience underscores the point. While writing his dissertation for the Ph.D. in economics he received from the University of Rhode Island, he also helped his wife raise their infant twins who were born two weeks after he defended his thesis.
Asked how he's able to keep from wearing out, Zucker cites his fear of failure, "like a real fear, a God-awful, holy-crap kind of fear." That fear translates into a competitive nature that Gilt Groupe chairman Susan Lyne says via email is "a very good quality in a marketing executive."
"He sets aggressive goals for himself, takes responsibility, and he delivers," says Lyne. She credits Zucker's "strong CRM background" with companies such as Dell, Home Shopping Network and Martha Stewart Living Omnimedia as the reason for his initial hire as VP of customer marketing in November 2009. His ability to leverage that background led to his promotion to CMO last December.
Zucker credits his entrée into marketing in no small part to learning about the Five Forces model from Harvard Business School's Michael Porter while writing his economics Ph.D. dissertation. "I read that book and literally wrote my dissertation in three months because it made economics click for me. It made it all come together and [helped me to] understand this is how you apply it and these are the problems you're trying to solve," says Zucker.
To solve the balance between Gilt Groupe's expansion and the retention of its membership, Zucker returns to the customers and their problems. Because of the rapid pace of Gilt's shopping experience, he makes sure communications with members are as personalized as possible so that members don't have to sift through a mosaic of products that won't pique their individual interests.
He says that Gilt Groupe institutes a nightly system that processes each member's on-site behaviors including browsing and purchasing histories, as well as third-party appended data and value-based and behavior-based segmentations and funnel that data into two algorithms. "We've been doing this now for nine months, and we've seen a 7% to 12% lift in revenue per email," says Zucker.
Zucker's customer-first mentality and methods will be ever more important as the company prepares to ramp up its growth curve. Coinciding with the full-price foray, Gilt Groupe has begun to research how best to expand its marketing portfolio to target a broader audience. We've become very efficient at moving people through the funnel," says Zucker. "Now that we've got the funnel working, it's time to open it up more strategically."