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Chubbies Co-Founder Kyle Hency on Driving Profitability Via Optimized Promotions

min. read
Chubbies Co-Founder Kyle Hency on Driving Profitability Via Optimized Promotions

Despite the monumental innovations that have reshaped the world of ecommerce in recent years, one constant has remained: promotions drive profits. Yet, few brands that offer promotions are optimizing them down to the cent — the way they do to other initiatives in their ecommerce stack.

Why is this an issue? Simply put, we aren't in the 2010s anymore. Stakeholder expectations are more exacting, and brands no longer have the luxury of experimenting and eventually finding product-market fit. They must focus on becoming profitable as soon as possible.

So we sat down with Kyle Hency, Co-Founder and CEO at GoodDay Software (formerly Co-Founder and CEO of Chubbies and Co-Founder at Loop Returns), to get his take on how brands can transform their promotions strategy into a potent profit-driving engine.

Keep reading to discover:

  • The importance of an optimized promotions strategy
  • How leading brands leverage customer incentives to drive sales
  • Why Kyle recommends Monocle to help brands drive profit
"We quickly learned at Chubbies that withholding promotions wasn't the most profitable decision, especially with how competitive the market is today. That's why promotion optimization tools like Monocle are key – helping brands deliver optimized offers on a per-customer basis."
– Kyle Hency, Co-Founder and CEO of Chubbies and GoodDay

The importance of an optimized promotions strategy

Promotions can take many different shapes and forms (free gift with purchase, percentage off, BOGO, etc.). Within this broad spectrum, Kyle favors offers like free gifts that aren't directly price-related — due to their psychological and awareness-related benefits. However, he does stress the importance of optimizing your price-related promotions, as they have a direct impact on your brand's profitability.

Kyle says brands tend to get a bit "overenthusiastic" with their discounts without realizing how much these offers impact their bottom line. From his experience, up to 40% of the average brand's revenue is affected by discounts — requiring them to generate much higher sales to offset this negative impact.

So why are the majority of ecommerce brands falling into this trap? Kyle points to three key reasons:

Problem #1: "Strategy" without substance 

Brands often take a surgical approach to the optimization of their ads. Yet, their promotions strategy tends to fall under one of two categories: discount or don't. This all-or-nothing approach fails to help brands leverage their promotions to reach a certain ROI threshold or align with their budget.

Problem #2: Overreliance on manual reporting methods 

Speaking from experience, Kyle says even gargantuan brands (over $100 million ARR) still manage their promotions strategy via spreadsheets. As for SMBs, they likely aren't tracking the bottom-line impact of promotions at all. This means associates can spend hours digging through endless pages to uncover mostly surface-level insights and optimization opportunities. And, unless they generate lengthy profit-and-loss statements, brands can’t reliably see how promotions affect their profitability — a particularly critical issue regardless of size.

Problem #3: Generic, impersonal offers

Personalization is paramount in every facet of ecommerce. However, most brands simply don't have access to the data required to personalize their offers at scale. That’s why so many resort to guesswork or basic competitor analysis. But, neither of these strategies takes into account the thousands of data points surrounding each user. This means even high-intent customers who would have purchased at full price often receive unnecessary offers, further eroding profit margins.

"The industry has shifted focus from new brands building and disrupting incumbents, to driving profitability as early as possible. In this new ecommerce landscape, targeted and profitable promotion strategies will beat batch-and blast-offers every time."

How leading brands leverage customer incentives to drive sales

Rather than relying wholly on blanket percentage discounts, Kyle remarks on the effectiveness of leveraging customer incentives to stand out in the maddening crowd. For example, the Chubbies team enacted an ongoing free hat-with-purchase offer as a gentle push to price-conscious customers who were hesitant to convert.

The Chubbies team knew there was a psychological and word-of-mouth benefit to offering free merchandise. Whenever a customer wore the hat, they inadvertently informed their friend circle about Chubbies, which kept the brand at the top of the customer’s mind — eventually leading them back to their site to make a purchase.

The results of this tactic? Chubbies saw steady increases in CVR and NPS without diluting brand equity or compromising profitability.

"It was a big swing, and we were concerned it might negatively impact customer LTV. But, on the contrary, the offer continued to move the needle, and our customers continued to get more excited about our brand."

Another crucial learning from Kyle and the Chubbies team was the importance of delivering unique loyalty incentives. This doesn't mean establishing a cut-and-dry reward points incentive but rather a personalized series of offers that move customers through flows and maximize LTV.

With offers like free merchandise or shipping, Chubbies provided additional value to the customers who were engaging with the brand, rather than spending copious amounts of money courting people who were only partially interested. Chubbies’ strategic approach to crafting a brand environment that catered to its best customers is what empowered its team to cement shopper loyalty and LTV.

"Looking back at my time with Chubbies, I can confidently say loyalty incentives were a key factor in helping us drive LTV from returning customers. Our marketing team, led by my co-founders, Tom and Preston, also provided me with a constant stream of feedback on which incentives were working and which needed improvement."

Why Kyle recommends Monocle to help brands drive profit 

An optimized promotions strategy is no longer a "nice to have." It's a core differentiator and profit-driving engine for brands of all sizes. So, how can your brand take the first step in transforming promotions spend into profits? Kyle says one of his personal favorites is Monocle.

"Monocle is one of few tools that allow brands to get more out of having fewer resources. That alone is a major unlock for brands looking to achieve profitability earlier in their lifecycle equation."

Monocle is an AI-powered promotions platform founded to unlock the power of machine learning in discount strategy. With a no-code approach to offer personalization, Monocle helps brands align the right customers with the right offers, every time. Kyle himself is both an investor and advisor to Monocle, bringing his 10+ years of ecommerce expertise to the table.

5 reasons to use Monocle

Kyle says Monocle helps ecommerce brands unlock a more profitable and personalized promotions strategy in five key ways:

  1. Personalization: Rather than relying on guesswork, competitor analysis, or months of testing and iteration, Monocle analyzes hundreds of signals to arrive at the optimal offer for each customer — without altering existing workflows. In Kyle's experience, these kinds of personalized offers come with many downstream benefits, including stronger customer LTV.
  2. Causality: Monocle's Causal AI reveals which specific offers led to a conversion, removing the guesswork surrounding your promotions strategy. This feature is a personal favorite of Kyle's because DTC brands across all verticals struggle with attribution.
  3. Incrementality: Generic coupon strategies make it nearly impossible to understand whether an offer contributed to brand performance. Monocle's AI models generate offers that maximize incrementality while protecting brand equity. Monocle's offers can also be tailored to the brand’s current objectives (driving demand, safeguarding profits, etc.)
  4. Strategy: Monocle replaces the tired "all-or-nothing" approach to promotions strategy with strategic offers that deploy the moment they're needed. Kyle says Monocle's continuous insights into the impact of discounts on the overall business lead to dynamic optimization opportunities.
  5. Long-term value: Optimizing your long-term promotions strategy is a core competency of Monocle’s platform. With no-code analytics tools that deliver a comprehensive overview of how offers impact profits, optimizing your long-term promotions strategy quickly becomes effortless.

Having led a world-class team whose day-to-day was spent analyzing and fine-tuning promotions impact, Kyle knew firsthand how impactful Monocle’s streamlined approach to offer optimization could be for ecommerce brands everywhere.

"We've seen test brands on Monocle showing a 30% to 40% lift in revenue and gross profit, which is simply incredible. Big swings in my former life often yielded a 5% to 10% uplift, so it's pretty exciting."

It’s time to prioritize promotional perfection

Relying on competitor analysis and a degree of guesswork isn't a viable way to transform promotions spend into profits. With the right tools (such as Monocle), brands can deploy personalized and profitable offers at scale — overcoming the most prominent hurdles to success in modern ecommerce.

Are you ready to drive more profits from your promotions strategy?

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