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Cristina Dinozo
Senior Director of Marketing Communication @ Yotpo
December 2nd, 2019

How Steve Madden Nailed D2C Growth

Learn about the critical changes Steve Madden made to their tech stack and their strategy to come out on top in today’s eCommerce ecosystem.

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Steve Madden has seen massive growth over the past year. With revenue and gross profit margins on the up and up, the business is doing more than $1.7 billion in annual sales and has a market cap of about $3 billion.

What’s behind this growth?

Bloomberg reporter Matt Townsend sat down with Steve Madden’s President of Global eCommerce, Jeff Silverman, to find out. In a conversation during Yotpo’s Destination:D2C conference, Silverman discussed how Steve Madden spurred serious growth by prioritizing their direct-to-consumer channels and improving customer experience with agile technology.

How does a D2C strategy coexist with wholesale?

The Steve Madden brand pre-dates the rise of eCommerce, and yet, where most legacy brands are struggling, they have seen success thanks to being smart about D2C alongside third-party retail. Their shoes are available directly from Steve Madden, as well as through retailers such as Macy’s, Amazon, Target, and Zappos.

This dual approach has an effect on retailer metrics. For example, Silverman explained that if a business is only selling D2C, conversion rates are going to be higher because shoppers don’t have other options for where they can buy your products. The dual approach also affects purchase behavior, allowing brands to reach a wider audience through retail, although they may not actually buy through that channel.

“When you sell wholesale, there’s no chance that the retailer you’re selling to is going to buy all of your products,” said Silverman. “So if someone discovers your brand at Nordstrom, the odds are very good they’re going to come to your site or one of your retail stores because if they like the brand, they want to say, ‘Hey, what else does that brand have to offer?’”

The importance of D2C grows more significant as department store market share continues to decline.

We’re trying to have a direct-to-consumer relationship because I think in 2019, brands without that D2C relationship are at their own peril.”

Rethinking eCommerce using agile technology to support growth

Silverman’s own experience with eCommerce led him to work with Steve Madden in the 2000s and then return to the company years later. Over that span, there were significant changes in both eCommerce technology and the competitive landscape.

Back in 2005, there were no technologies or platforms for eCommerce. So Steve Madden built their own. When Silverman returned to the company in 2015, their eCommerce platform was running on Oracle. “From my perspective, it was an enterprise legacy mess of solutions to run a site that was extremely costly and made us very slow to be able to do anything that we wanted to do,” he explained.

Between November 2018 and January 2019, all Steve Madden brands migrated to Shopify.

We just got rid of all of the legacy that was there and ended up growing the business exponentially and dramatically reducing costs.”

This move away from legacy technology is an indicator of shifting business priorities. With a more agile solution, businesses can better address customer needs and move quickly in response to changing consumer behavior. For example, a single influencer post may make it timely to implement a sale price or reformat the homepage with a specific shoe line.

In addition to being more dynamic, agile eCommerce technologies also reduce operational costs. It’s a win-win. “Yesterday I was in a meeting,” said Silverman, “I felt like I was in 2012.” The company priced its technology at $100,000 per year with a three-year contract, and they wanted full payment at the beginning of the year. “And I was like, ‘You’ve got to be kidding me, right?’ This is 2019, that’s not how it goes.”

Today’s agile tech also offers exponential benefits through seamless integration. Not only does this consolidation reduce operational complexity, but it improves the on-site experience and allows for more personalized customer experiences. When Steve Madden integrated Yotpo with their tech stack, they were able to create unique experiences via reviews, visual UGC, loyalty, and referrals. For example, they can now populate their website and Google Ads with influential customer photos. Using Yotpo, Steve Madden has collected 57% more reviews and increased social proof with user-generated content embedded into product listings. This, in turn, contributed to the brand’s significant growth.

Loyalty vs. the race to the lowest price

When you do customer experience right, you develop a loyal customer base that is willing to pay more for the same products.

While online shopping gives users the tools to find the retailer with the best deals, Steve Madden found that price isn’t a critical factor among their brand loyalists. With an improved on-site experience and strong search optimization, consumers would shop Steve Madden D2C even if they could get better prices elsewhere.

Shoppers prefer buying direct because Steve Madden’s customer experience is tailored to their needs. There are informative reviews from other shoppers onsite; the free and premium loyalty programs offer exciting perks, from free two-day shipping to enticing deals; and checkout is seamless on both desktop and mobile.

Plus, Steve Madden transformed its digital relationship with customers, opting to work towards longterm loyalty instead of immediate purchase. By switching their main call to action from an email list sign-up to a loyalty program one, “gross margins on the site rose dramatically,” said Silverman.

Previously, the company tried to compete on price by offering deep discounts. However, they have since made a policy shift to only run sales during major shopping events such as Black Friday, or Labor Day, focusing on relationship-building over discounting.

The Kimmie as a case study

The Steve Madden team knew they were onto something when they shifted everything from their tech to their sale strategy to prioritize customer experience and relationship-building. However, it was a single shoe that became the proof they needed to really dig in their heels, so to speak.

A practical espadrille platform sandal, you’d likely recognize the Kimmie as the essential summer shoe for every aspiring fashionista. Naturally, shoppers were searching for it everywhere, including on third-party sites. Steve Madden knew that getting people to purchase on their site could prove to be a challenge — but ultimately, their end-to-end customer-centric experience won out.

“We were using social media ads to let the world know that we’ve got the Kimmie,” said Silverman. “Our sales on that style were up like triple-digit percent. We could not keep the thing in stock, even though we were clearly not the lowest priced. And if you did a search on Google… right there on those results, you would see that somebody else had it for less.”

Top takeaways

Steve Madden was quick to embrace the technology and strategy needed to achieve massive growth in today’s eCommerce ecosystem. These are the key lessons to learn from their meteoric rise:

  • Avoid the race to the lowest price by investing in a customer-centric D2C channel.
  • Update legacy eCommerce platforms and tools to agile technology.
  • Improve on-site customer experience with reviews and customer photos.
  • Implement a loyalty program that provides real value.

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