Over the past year, retention has become one of the buzziest terms in eCommerce. Repeat, a personalized CPG reordering platform, sits at the cutting edge of the retention landscape and works with category-defining brands like Huron, Osea, Hydrant, Lemon Perfect, and Blume.
Retention as a DTC Growth Driver
The first version of Repeat’s software was used for Kim’s own DTC brand, UNDR, which launched in 2017. Her team experienced the complexity of getting customers to reorder in a delightful and frictionless way. With these learnings in mind, she wanted to build something better - something with the consumer replenishment experience at the core. What she built worked for her own brand, so she wanted to share it with the world, thus Repeat was born.
In Kim’s words, “We lived our way to the problem, and we’re now solving it for other brands.”
Retention is a much broader topic than most people think. At Repeat, the team believes brands will stop referring to it as retention. Rather, they prefer to call it first purchase acquisition.
As it stands, retention is so talked about because it’s the flip side of the acquisition coin, and paid acquisition is more expensive and harder than ever. Critically with the introduction of new iOS updates infusing turbulence into the space, the consumer is getting all the power back. Now that it’s so much harder to get consumers' attention, the real opportunity lies in retention.
After a consumer’s first purchase, it’s all about convenience. They know what they’re looking to buy, and they’re just looking for someone who can help them reorder on their own terms.
“Retention drivers span community, SMS, email, sampling, content, product catalogs, checkout flows, and distribution. More importantly, additional drivers are emerging every day as new platforms and channels unfold.”
Core Levers for Ramping Retention
According to Alex, the lever that most operators are sleeping on is the product catalog.
If a brand only sells one product, that’s not retention, it’s reordering. Put simply, the brand has nothing else to sell. To get people to discover more aspects of a brand, a customer needs options. Over time, customers just won’t buy the same product over and over again.
So, what makes a strong retention marketer? For Alex, it’s about having continual touch points with the customer. As a result, he points out that folks with a background in CX usually make great retention marketers. And if a brand is just starting to dabble in retention, the low-hanging fruit exists in the email world and content world. Hiring email marketers who can focus on the post-purchase experiences along the funnel is one of the fastest ways to see retention uptick.
“At the end of the day, customers just don’t buy from brands anymore. They buy from relationships with real people.”
Pushing Beyond The Subscription Model
When brands dive into tactics around increasing retention, their first thought turns to another subscription model, but there are so many other routes that teams need to consider. DTC brands shouldn’t ask themselves, “How can we get as many people into subscription as possible?”
Instead, they should ask, “How can we reduce one-time purchases?” If a brand is going to pay and do all the work to attract customers for the first time, they need to do everything they can to hit purchase number two, three, and four.
If a brand wants to consider using a subscription model, Alex suggests creating a matrix by mapping out order value and replenishment rate. At its core, subscription works best for products with low price points and high replenishment rates (less time in between purchases).
It’s also critical for teams to think about discovering and analyzing predictable consumption patterns across multiple cohorts. For example, people eat cereal every day, and more often than not, multiple people per household consume it. That use case is primed for subscription.
“The large majority of DTC brands push customers towards a subscription offering. However, subscription isn’t the only retention tool in the toolkit.”
The Repeat Formula to Success
While brands, especially those with replenishable products, aim to drive customers to subscription, not all customers want—or even need—a subscription.
Repeat is focused on helping brands serve these customers by building the “Buy Again” button for DTC.
Much like the way Amazon, Target and other major ecommerce retailers have made their account pages shoppable, Repeat gives brands the ability to deliver that experience to their customers, so they can easily reorder items they’ve previously purchased.
This type of experience, it turns out, is exactly what many customers look for: According to a survey done by Coefficient Capital and The New Consumer, 43% of consumers start their online grocery orders with their last order. In other words, the first place they go is to their order history.
With Repeat, brands can lean into this type of consumer behavior and drive incremental revenue via higher conversion rates and increased average order value—with an end result of increasing LTV.
While everyone wants to know their LTV, it’s only one metric and nearly every brand calculates it differently. Alex points out that the key unlocks are dashboarding, creating starting benchmarks, and tracking metrics on a per product level. The hardest part of LTV is the T, or time window.
When evaluating LTV, brands should ask themselves:
- What’s the customer’s LTV after their purchase in 90 days?
- Of the people who buy this product, what else are they buying?
- How valuable is the customer after they’ve been pushed to our site?
From a product perspective, variety or sample packs are the gateway to customer retention. If a customer doesn’t know what they want and decides to purchase a variety pack, brands can learn a lot from their second purchase. Diving deeper, they can look at which products in the pack have a higher LTV as well as the statistical probability of someone getting hooked.
In addition, if a bundle includes the brand’s hero product and other items that are typically replenished at a higher rate than most, the brand now has a valid reason derived from quantitative data to engage with their customer and remind them to purchase again.
“Retention is like going to the gym. When you look at yourself day to day, you probably won’t see much of a difference in muscle gain. But over an extended period of time, you’ll see just how much progress you’ve made.”
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