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Transform Your Retention Strategy: The Shift to a Customer-Focused Approach

Hi Retention Aficionados!

Good to be back home, albeit jetlagged as hell. We are back to the 4am-8pm grindset (#hustleculture), and slowly pushing through.

JRB had a big launch last week (bronzer!), and it’s been amazing to see how many existing customers came back to grab it.

Although it isn’t always the easiest fix, new products do wonders for retention.

This week, we are zooming out. We are double-clicking. We are taking it offline. (lol, did I use any of these terms correctly?)

Retention has progressed significantly from the traditional methods of email and SMS spam. The spotlight has shifted towards a comprehensive approach that considers the entire customer journey.

In this newsie, we'll take a closer look at the development of retention tactics and how companies can now prioritize a customer-focused approach.

  • Transformation: The Evolution of Retention Tactics

  • Prioritization: The Shift to a Customer-Focused Approach

  • Implementation: Utilizing Data for a Cohesive Experience

Before we hop in, I wanted to share the most recent episode of Down To Chat, it might be my all-time favorite.

Cody went deep on creative testing, and I spoke about our post-purchase customer communication vision.

Check it out, and please leave us a review if you love it!

Let's get into it.

This newsletter is brought to you by Tapcart.

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To me, the best and easiest way to level up your strategy is to do what thousands of brands are already doing: adding a mobile app to your marketing mix.

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Remember when “retention” was synonymous with lifecycle marketing and easily interchangeable with “email marketing?”

It wasn’t that long ago.

Just a year or two ago, success was closely tied to how well companies scaled their Facebook ads arbitrage. With low customer acquisition costs, brands could profit even with high churn rates.

The focus was on top-line growth rather than profitability, and a decent customer experience was often considered enough.

Many brands flourished using this method.

The “retention” hire was considered the lord and savior responsible for fixing a crumbling facade.

The growth team acquired customers.

The retention team hopped in and set up whack and aggressive email/sms campaigns to win back customers so the growth team could continue spending.

🤝

First-order profitability was much easier in the early days of FB ads. Customer acquisition costs (CAC) have dramatically increased over the last few years, especially since iOS implemented its tracking changes.

Add supply chain and inflation woes to the mix; it makes for some, now say it with me, ~unprecedented~ times.

Eli, what’s wrong with sending a bunch of emails and texts with discounts to get customers to buy again if it works for us?

A few things:

  1. You are training customers to buy your product at a discount, and getting them back at full price will be tough.

  2. 90% of brands are not testing this out to see if customers would purchase without the discount. Is any of this incremental, or are you giving up unnecessary margins?

  3. Can you name a single brand you like or feel strongly about that spams customers until they purchase?

We can certainly argue about that last point regarding spammy tactics negatively impacting your brand. Not now, though. I’m tired. 🥱 

I’m sure many of you have been convinced by your local agency that the more you send, the more you make, with no negative long-term impact. Come back and let me know how it goes. 😏

Prioritization: The Shift to a Customer-Focused Approach

What we’ve learned as retention marketers is this:

Retention is not as complex as you think.
It’s just ensuring you meet customer expectations across the entire customer journey.

Audit your journey and ensure you put the customer first and are not overpromising.

  • Ad Copy

  • Landing Page Promises

  • Shipping & Delivery Timing

  • Product Quality (A BIG ONE)

  • Return/Exchange Policy

  • Customer Support

We’ve seen brands promise that their product will change your entire life, and then deal with tremendous churn when folks quickly realize it’s not quite that.

Instead of optimizing for cheap acquisition and customers that’ll never re-purchase, it’s more sensible to promise what you can deliver and keep customers for a while, even if it costs a bit more to acquire them on the front end.

If we have learned anything from the last few months, it’s that just shooting in the dark for new customers isn’t a long-term win for the business if nobody comes back.

Companies that grew like a weed and raised a ton of capital can no longer sustain themselves on growth alone if they want to achieve profitability.

Enough soap-box lecturing. Let’s make this practical.

Implementation: Utilizing Data for a Cohesive Experience

Before going deep into understanding customer journeys in order to retain your customers better, I’ll say this:

  1. Soliciting any feedback from your customers is better than nothing

  2. Cross-selling any product to recent customers is better than nothing

  3. Sending any post-purchase email is better than sending nothing

Don’t let the pursuit of perfection get in the way of acting at all.

Now that we got that out, how should a brand get kicked off on post-purchase email flow and optimize for basic customer retention with nothing yet in place?

Research:

In the 50+ conversations I’ve had with founders and marketing leaders on Mentorpass to “fix” CX or Retention, less than five had done the research to understand why their customers were not returning.

We’ve viewed retention as a “customers forgot we exist” problem instead of the reality, which is that (gasp!) your product isn’t as important to them as you’d like to think.

If they have purchased your toothpaste and didn’t repurchase, I’d imagine they are still brushing their teeth, just using a different option.

The same goes for deodorant, cookies, healthy soda, or makeup.

They’ve filled that need or want with something else, or it was no longer interesting enough to justify them parting with their hard-earned money.

Instead of guessing and trying to sling discounts until they repurchase (or unsubscribe and file a restraining order), just ask.

It can be a basic Typeform or a survey of sorts.

“Hi Bradley,

Eli here, Director of Customer Experience at Lux Chocolate Co.

Just wanted to thank you for being an early customer… your support has been so helpful in building Lux…

I’ve seen you have not purchased in a while. Do you mind answering two quick questions about your experience?

It should take you up to two minutes, and we are choosing a few folks that respond to win a $200 Starbucks gift card as a token of our appreciation.

Thanks so much,

Eli”

The two questions can be as simple as:

  1. Why did you not repurchase x?

  2. Is there anything we could have done to improve your experience with us?

Feel free to keep it as basic as possible. You can create multiple-choice answers for the first question with an “other” option (make responses mandatory), so you can tally quantitative and qualitative feedback.

You don't have a starting point without understanding why folks are not repurchasing in the first place.

Bonus: Use data from your returns portal, reviews, NPS comments, comments in your online community, etc., and tally up the number of times you have heard specific words to get a more rounded understanding of what folks love and hate about your product.

Wire-framing:

Once you have an idea of the problems customers are having with your product, assuming they are not all product-inherent, you can start working to solve them.

The idea here is simple. If you can ensure that customers have an as-expected experience with your product, they have a good reason to come back and buy again.

Think about what it takes to make sure a customer has success with your product and split it into a few parts:

  1. Regret Minimization: ensure they feel good about the purchase they made

  2. Educate: ensure they know how to use the product they purchased

  3. Extra Credit: ensure they get your vision and mission if applicable (avoid the kool-aid)

Once you get these basics out of the way, you can start thinking about upselling and cross-selling in a way that makes sense.

Map out a customer journey so you can ensure it’s all happening in due time. I.e., don’t upsell before the customer even gets their product or knows how to use it.

Bonus: These principles are widely applicable, not just in DTC.

Don’t upsell SaaS before customers achieve success with their current plan.

Don’t opt for credit card renewal before ensuring customers derive any benefit from the card.

Design:

Once you get a better idea of the messaging you are trying to get across, you’ll have a much easier time creating a cohesive brief to your designer around what you are looking for.

When a designer has an idea of the mission and not just an “I need this” brief, it gives them the creative freedom to create magic.

The best design comes from a well-crafted brief and a buy-in on the vision.

E.g., instead of:

“Design an email that tells people how to use this product, and we need to use these photos.”

Try doing:

“We have an issue where customers buy x and then don’t repurchase it. Based on feedback, we realize it’s because they have no idea how to use it correctly. Here are the ways we have educated customers on product usage on our blog, and we need help getting it out to all the customers in a post-purchase email. Go crazy on this. Please make sure it solves this problem and follows our general email best practices (header above the fold etc.).”

Bonus: Having an inspiration bank of other emails you love is always helpful to give your team a good jumping-off point.

That's it for this week!

If you made it until the end and enjoyed it, I ask for one small favor:

Please share it with a friend or colleague to get this out to more people.

See you next week,

Eli 💛