My 10-Part DTC Retention Program

#1 Understand your baseline metrics

LTV:CAC Ratio.

This is your customer lifetime value to customer acquisition cost ratio. It should be at least 3:1 - if it’s not, you know what you need to achieve. If it already is, set incremental goals to continue improving it. If your LTV:CAC Ratio is too high, this is an indicator that you can open up your paid acquisition budget some more!

90-day Repurchase Rate

What % of your first-time customers are repurchasing within the first 90 days? The higher this % is, the higher the % of customers will make it to order #3, and so on. There’s going to be a % drop off of customers each subsequent order # like a cascading waterfall.

Average Time between Order #1 and Order #2

Getting first-time customers to repurchase is crucial, so you should optimize your email/sms flows around this typical time frame, specifically your replenishment and win-back flows.

AOV

The higher your AOV is, the higher your LTV will be. Utilize free shipping and gift with purchase thresholds to incentivize larger purchases. Cart, checkout, and post-purchase 1-click upsells are easy wins to implement.

LTV

As a DTC brand, I believe LTV is the most important KPI to track. A high LTV indicates a healthy brand with loyal customers and allows you to scale faster.

I like to track 90-day, 180-day, and 1-year LTV.

How to Track

I leverage Lifetimely across all of our client’s stores to track the above metrics.

#2 Understanding Segmentation & Personalization

What is Segmentation?

Segmentation is dividing your contacts into potential groups of similar needs and behaviors based on data. It can start broad and get increasingly granular, allowing you to execute a personalization strategy for your retention program.

What is Personalization?

Display personalized content (sometimes dynamic) based on customer data. Without segmentation, you wouldn’t be able to target these customer groups. Here’s a basic example:

No Personalization

Hey, {Product B} is 20% off!

With Personalization

Hey {First Name}, we know you’ve had success with {Product A}, so we wanted to let you know that {Product B} combined with {Product A} will help support your unique skin profile and health even more! Here’s a special 20% off code to experience the power of combining both.

Where you can Leverage Personalization

1. Email/SMS
2. Order Tracking Pages
3. On-site Content & Customer Account Pages
4. Much more!

#3 Get the Data - Zero & First Party

What is Zero & First-Party Data?

Zero-Party Data: Data given directly by customers to your brand. Examples include a post-purchase survey or a quiz.

First-Party Data: On-site behavior data from your customers. Examples include web pages viewed and products purchased.

Why Should You Care?

Zero & First-Party data allows you to segment your customer database, enabling you to create personalized experiences, both pre and post-purchase, to improve retention and increase LTV.?

You can create segments based on zero-party data only, first-party data only, or get really crazy and create a segment utilizing both!

Here’s an Example of how you can Start Broad and get Extremely Narrow with a Segment, Leveraging both Zero and First-party data:

• Email is known.
• Email is known and has ordered.
• Email is known and has ordered 2x or more.
• Email is known, has ordered 2x or more, and has purchased X product.
• Email is known, has ordered 2x or more, has purchased X product, and the last order date is 90 or more days.
• Email is known, has ordered 2x or more, has purchased X product, last order date is 90 or more days, and quiz answer 1 is Y.
• Email is known, has ordered 2x or more, has purchased X product, last order date is 90 or more days, quiz answer 1 is Y, and average product review rating is 4 stars or higher.

How I Implement:

I see a lot of brands that collect a ton of data but don’t use it in their post-purchase strategy. Why? They start with just trying to collect a bunch of data without any idea how they will use it, so what we do instead is think about what sort of personalization would make the post-purchase customer experience more relevant and valuable. Once we know what that is, we can determine whether first-party data will suffice or if we need to strategize how to get zero-party data.

Applications to get Zero-Party Data:

These tools all have integrations with Klaviyo.

1. Octane.ai - Quizzes
2. Fairing, formerly Enquire Labs - Post Purchase Survey
3. Okendo - Reviews

We’ll touch on some examples in section 8.

#4 Transactional Journey

The Typical Setup

Most brands use Shopify’s default order confirmation and shipping emails, texts, and tracking pages.

What I do with all of our clients - Malomo

Utilize a platform like Malomo to transition all transactional emails and texts to Klaviyo and create custom order tracking pages.

Why?

1. Ability to personalize. For example, Electriq created a separate transactional journey for one-shot customers and a different experience for subscribers for Soylent, resulting in a 54X ROI.
2. Ability to view performance (your standard email metrics like click rate) and A/B test to try and improve it.
3. Extremely high engagement. Your open and click rates will be significantly higher than marketing emails.
4. On average, customers check their order tracking page 4.6 times per order. This typically makes up 10-20% of our client’s website traffic.
5. Custom order tracking pages provide a branded experience with educational information that builds community and drives additional revenue with upsells.

#5 Making Reordering Easy

This is applicable for most brands, but especially for anything consumable. I will consistently implement Rebuy reorder landing pages in clients’ replenishment and win-back flows. These landing pages have the customer’s previous order pre-populated in the cart, the ability to showcase free shipping and GWP order value thresholds, and also surface dynamic product recommendations that customers will be most likely to add to their order.

#6 Retention for Subscriptions Programs

Make it Easy to Manage

Ten years ago, subscription programs' number one retention strategy was “make it extremely difficult to cancel.” Customers no longer accept this as the norm, and the thriving subscription programs allow customers the utmost flexibility and freedom.

Increased LTV

Across all of Electriq’s clients, we see an increase in LTV for customers that take action on their subscription, such as skipping an order. One would think a brand shouldn’t want its customers to skip an order, but if you think about it, it makes sense. If this customer couldn’t skip their order, they’d get an order they didn’t need just yet and leave them with no choice but to cancel after receiving it. Once a customer cancels, it is significantly more challenging to win them back as a customer.

RechargeSMS

If you’re leveraging Recharge for subscriptions, make sure to implement RechargeSMS. We see up to 30% increases in LTV for our clients that allow their customers to manage their subscriptions entirely via text.

#7 Adding in a Loyalty Component

My Case Against Points-based Programs and Using a Loyalty App

I typically see 1-2% customer adoption of traditional loyalty programs… There are a ton of potential reasons for this, depending on the brand, but I’ll list my top 5 here:

1 - Friction

Most loyalty programs I see and interact with are filled with friction throughout the entire buyer’s journey. If you’re a subscription customer, it’s even worse to try and utilize the loyalty program. Let’s walk through an example of a traditional points-based loyalty program to highlight the pain points you would experience:

1. You land on the site and get prompted to “follow the brand on Instagram” to get 100 points. Two issues here! Number one, what the hell do 100 points equate to? Is that worth $100 or 1 cent? Number two, why do we send the potential purchaser off the site, disrupting their buying experience?
2. So now that you have your points, will they automatically apply at checkout? Nope! 99% of loyalty programs I see require going to a separate landing page to redeem your points for a code you need to copy and paste into the checkout. More steps and more friction!
3. Now you’ve finally made it to checkout, congrats! Enter the code you got from the loyalty program… Oh, you want to use the 15% off welcome pop-up code you got as well? Surprise! You can’t combine them :)
4. Customer adoption for repeat purchases is extremely low (less than 2%), especially for subscription customers. Why? Subscription customers need to check their points balance, redeem them for a code, log into their subscription management portal, and find where to place the code before their next order goes out. What is the purpose of all this friction? Why do the points not just get automatically applied to their next order?!

2 - Just Thrown up on the Site

So many Shopify stores I audit have a loyalty/referral program that they just downloaded, threw up in the bottom left corner of their site, and have no plan for how it fits into the customer journey or how they’ll encourage adoption of the program. It’s not their fault, either! Over the last few years, the consensus has been, “you need to have a loyalty and referral program!”

Instead, it looks disconnected from the site. Consumers are confused because they also see the same program with different point values on tens of thousands of other sites, and it doesn’t do anything except cost the brand money.

3 - Lack of Resources

A successful loyalty program requires a team or person responsible for monitoring it, integrating it with the customer journey, and driving adoption. A place I see a lot of brands falter is thinking that they don’t need to put resources against it (or they simply don’t have the resources for it, so they should wait before getting started) and don’t get the results they are hoping to see because of it.

4 - Not integrated with the Customer Journey

This extends point 1 a bit, but I see the most significant disconnect here is in the post-purchase experience. If you’re not leveraging the Klaviyo integration to segment your customers based on the number of points they have, whether or not they are a member of the loyalty program, etc., you are missing out on increasing adoption and making it a core component of your customer retention strategy.

5 - Financial Liability

All of these points are a financial liability!!! These points represent a promise for future transactions, so their monetary value counts as a liability on the brand’s balance sheet. I strongly recommend having an expiration period for all points. You can also use this in your marketing messaging to encourage customers to redeem!

Loyalty Alternatives

All of the reasons above are why I am such a strong proponent of NOT using a loyalty platform except in particular use cases. Instead, focus on how you can surprise and delight your customers and altogether remove the friction from the #1 thing you want them to do - buy and keep buying! Here are some creative ways and examples of structuring this:

• Utilize spend tiers that kick in rewards automatically for customers i.e.
• Silver: $50-250 in spend get 5% off
• Gold: $250-500 in spend get 10% off and free shipping
• Platinum: $500+ in spend get 15% off
• Utilize order tiers that kick in automatically i.e.
• 2nd order comes with a free product
• 6th order comes with exclusive VIP merch

Overall, if you couldn’t tell, I am bearish on traditional loyalty programs. I’ve found much greater success by automatically rewarding customers for the #1 thing you as a brand should want them to do - buy and keep buying!

#8 Customer Service

Either in-house or leverage an outsourced team, the stronger your customer service team is, the better your customer experience will be, improving retention and increasing LTV. I like to leverage Gorgias. Since it integrates with almost every Shopify app we leverage, the customer service team has a complete view of the customer’s journey up until that point, enabling them to create a positive customer experience.

#9 My recommended Tech Stack for Retention

Octane.ai

Guide the buying decision process and aggregate useful zero-party data you can leverage in your email/SMS flows with a quiz! Here’s an example of one we built for florence by mills.

We leverage the results in our email welcome flow.

And use them to build segments in Klaviyo that we’ll send personalized campaigns to.

Okendo

Help visitors on your PDP identify whether or not they want to purchase that particular product while aggregating zero-party data on past customers. For example, we know that Charles below typically brews his coffee pour-over and drinks his coffee with cream, so in the following email and SMS campaign we send him or in our automated flows, we can recommend products that will be best suited to that while also letting Charles know that’s what is informing our recommendation.

Fairing, formerly Enquire Labs

Create a stream of post-purchase questions targeting new vs. returning customers, helping with everything from attribution to new product development to zero-party data collection. For example, by asking if the order was a gift, we can route those who say yes into a special automated flow that gives them an offer to purchase for themselves!

Klaviyo

If you’re on Shopify, you need to be using Klaviyo. Every app you could leverage on your Shopify store will have a Klaviyo integration. Klaviyo is the platform to bring in all of your customer data and make it actionable.

Malomo

Take control of your customer’s transactional experience with Malomo.

Rebuy

Increase AOV and improve retention with this all-in-one personalization app. Electriq leverages Rebuy both pre and post-purchase:

• Recommended products at the bottom of product pages.
• Slide-out cart with free shipping and GWP thresholds, cross-sells, and the ability to upgrade products to subscriptions.
• In-checkout cross-sells.
• Post-purchase 1-click cross-sells.
• Reorder landing pages.

Gorgias

Empower your customer service team to turn customer service into a revenue-driving channel with Gorgias. Your CS team will have a unified view of the entire customer journey, including all relevant data from 3rd party apps, to effectively communicate and create a positive customer experience. The result? Improved retention and increased LTV.

Lifetimely

All of the above is great, but you need visibility into how your important metrics are impacted!

#10 Miscellaneous Tips & Tricks

AOV Boosting Tactics

Leverage Rebuy in all five areas mentioned above to increase your store’s AOV.

Talk to your Customers and ask for Feedback

One of the simplest things you can do as a brand is to talk to your customers and ask for feedback.

Turn your Negative Reviewers into your Biggest Advocates

You can turn your negative customers into some of your biggest advocates by going out of your way to make a situation right.?

Increasing AOV & LTV if You only sell One Product or a Limited # of SKUs

Carro allows stores like BlendJet that sell a single product to curate a marketplace of complementary products, making it possible to increase AOV, LTV, and overall sales.

On the flip side, our clients leveraging Carro’s supplier functionality can be listed on sites like BlendJet’s marketplace, driving additional brand awareness and sales. The best part? When a customer orders Soylent through BlendJet’s marketplace, that line item from the order gets sent to Soylent’s Shopify store to fulfill. Why does that matter? We now get that customer data and can remarket to them, essentially acquiring a new customer for zero CAC!

Wrapping Up

While the above is a great framework to get you started on your retention program, bringing in your unique flair and brand identity will help you differentiate from your competitors and create an experience that resonates with your customers!

Ready to get started but want the white glove approach? Reach out to me here, and let’s get to work!