The One Thing 95% of Retention Folks Miss

Hi Retention Wizards!

Exhilarating week. I’m leaving my house for two weeks in a row. Big moves for an introvert. 🙃

I’m joining the legendary Jess, Alex, and Gina on an IRL panel tonight in NYC to chat about “The Evolution of Customer Experience in DTC.”

I’d love to see you there! RSVP.

Last week, Cody and I released Season 3, Episode 1 of the “Down To Chat” podcast, which you can listen to here.

We talked about Twitter Ads, Advantage +, and Fixing Retention Problems.

Okay, let’s dive in.

This newsie stems from conversations I’ve had over the last few weeks with brands looking to improve retention.

They did all the basics.

Sent email flows and campaigns, sent a bunch of texts, etc.

Yet they were still not seeing a massive boost in retention.

Here is some advice I gave them.

  • Understanding Customer Churn: Find Out Why Customers Aren't Coming Back

  • When to Let Go: Ensuring You Are Focusing On the Right Customers

  • Retention Beyond The Basic: Innovative Tactics to Keep Customers Coming Back

This newsie is brought to you by Tapcart!

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Same story for other top Shopify brands like Chubbies, Kaged, and Obvi.

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I keep seeing more and more brands getting a mobile shopping app, across a ton of verticals.

Some of my favorite Tapcart apps are The Hundreds, Princess Polly, Ruggable and Truff. It just makes sense because an app makes a retention strategy stronger and customers stickier.

App users have proven they’re more die-hard fans, with higher conversion rates, revenue per session, and lifetime value than mobile and desktop web. Your biggest fans will almost always download your app, and that top 10-30% of consumers is worth 6X your regular customer cohort.

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Understanding Customer Churn: Find Out Why Customers Aren't Coming Back

“There’s no silver bullet for retention” is something heard so often.

It’s practically part of the retention bible.

The funny thing, however, is that most brands struggling with retention don’t really know what problem they are trying to solve.

They are convinced their product is the best in the universe, and their ads are working, but many customers just don’t return.

I’ve seen this go one of two ways:

1. Analysis Paralysis: 

Folks will look at the data and look at the data again, and then one more time for good measure.

They’ll work to understand which cohorts are stronger and which products yield better LTV customers.

They take all the data, create hypotheses, and struggle with implementation.

Often, it’s because they focus on the big and heavy boulders or because they have a dozen ideas and a lean team that can’t easily carry out the mission.

2. Doing all the STUFF: 

I recently chatted with a founder who was sending handwritten cards, giving free samples, educational follow-ups, and every other “retention hack” in the game.

The only problem was this:

They were unsure why folks were not repurchasing in the first place.

They were solving the problems without knowing what problem there was to solve.

Putting out a tiny fire with a hook and ladder firetruck instead of a fire extinguisher.

As an example:

Early on at OLIPOP, we aimed to solve our retention issues by sending more emails and discounting more (a fairly common approach taken by “best practices” marketers “).

But when doing research with NPS surveys and customer research (both qualitative and quantitative), we learned this:

  • Although taste preferences vary, most people actually liked it

  • All our ads positioning it as a soda swap made consumers confused about the cost

  • If it was 5x the cost of a coke, why was it not 5x as good?

We learned that we needed to put a staunch focus on value, as that was the #1 reason customers were not repurchasing.

Instead of discounting, we needed to pull the “education lever” to instill value in the product in an effort to help customers justify the cost.

Remember, we aren’t just competing with their other beverages in the fridge.

We are competing with every other item on their grocery list, maybe even in their budget more broadly.

We instilled education on our core value props across ads, post-purchase emails, subscription transaction emails, etc.

That did more for retention than all the free gifts and handwritten cards could.

Pulling all the levers to solve a single problem is costly and often ineffective.

Before making any big moves, send some customer surveys to the folks that bought once and churned to get a better idea if there’s a chance of winning them back.

Pro tip: 

If they purchased once and disliked it, they have no real reason to want to take time to fill out a 69-question survey, and they probably don’t want a gift card to your brand if they disliked the product they bought.

Instead, offer them a Starbucks/Amazon gift card for their time or a chance to win one if you are low on cash. Also, be upfront that the survey is two questions and will take less than three minutes of their time.

It can be something like:

  1. Why did you choose to order OLIPOP a few months back?

  2. Why did you not reorder OLIPOP?

Keep it open-ended and groovy.

When to Let Go: Ensuring You Are Focusing On the Right Customers

If your focus is getting every single person to purchase again, you will probably fail because a brand can’t be everything for everyone.

I’ll never forget a brand I spoke to in 2020 that was hardcore driven to get their repurchase rate at 100%.

He had his team spend hours a day calling lapsed customers and trying to get them to reorder over the phone.

AOV was under $100, and I’ll never get how that makes sense, but c’est la vie.

Truthfully, here’s how most of the CPG brands I’ve seen grow:

Going wide: finding more customers with paid and referral (organic).

Going deep: creating more value (LTV) for your existing customers.

With most brands, your top 20% of your customers can be as profitable as your other 80%, but so many folks spend most of your time getting first-timers to purchase again when they dislike the product.

An outstanding post-purchase email/sms flow can do a TON of work, especially once you know what problems customers are facing with their first-time orders.

But that will never solve all the problems for everyone.

Look at your data to understand your average time between purchases, and focus on getting customers to repurchase within that time frame.

Then use the next few months after that as a way to come up with different novel approaches focusing on warming up your “colder” audience.

Some ideas:

  1. Re-engage them when you are launching a new product they might like based on their earlier purchases

  2. Reach out to them around BFCM, especially if you are running a special sale or launching a limited-edition SKU

With consumables, the further away they are from their last purchase, the more clear it is to them that they can live without you.

Retention Beyond The Basic: Innovative Tactics to Keep Customers Coming Back

Avoid anyone that has a silver-bullet retention solution.

They are either selling you a tool, a course, or consulting hours.

In reality, retention should be quite simple.

Ensure the product you are selling solves the problem you promised it would solve.

It starts with a straightforward story and journey from the ads you show to the product you are selling.

But at the end of the day, not every buyer is created equal.

Here are some innovative ways to reengage your customers:

Direct Mail:

We’ve had tremendous success testing Direct Mail campaigns on customers that have purchased more than twice and not purchased in a while (even as far as 6+ months)

By isolating customers that purchased once and never repurchased again, we can assume that direct mail is not doing the job of getting them to like our product but rather re-engaging them with a brand they’ve purchased from and liked enough to repurchase.

We’ve tested direct mail with a holdout to test incrementality and have consistently seen 5-10x incremental ROAS, and we are only just getting started.

Dedicated App:

When it comes to staying close to customers, I’ve seen quite a few brands like Obvi and Kaged use a dedicated app to send (free) push notifications and launch exclusive deals via their app.

While an app might not be the best method of communication for every single customer, it is often a good tool to massively increase revenue from your top 10-15% of customers.

Mobile apps help businesses to target their best customer segments and increase session frequency and conversion rates, resulting in higher order frequency, retention revenue, and profits.

The targeted activation of the best customers, who often download the app, has been shown to result in a 2.4x higher lifetime value compared to customers who don't use the app.

If there is one thing I’m leaving with you this week, it’s this:

Be sure you talk to your customers to understand why they are not returning before ”fixing” your churn.

That’s all for this week!

Any topics you'd like to see me cover in the future?

Just shoot me a DM or an email!

See you next week,

Eli 💛