Plus, The Race to Capture Gen-Z's Attention
Brandon Amoroso ?
Co-Founder @ SCALIS | Founder at Electriq (acquired) | 30u30 Miami | 2x Underwater Basket Weaving National Champion | 3x Men's Basketball League Runner-up | Largest Ferrari collection in the world (the hat, not the car)
The TL;DR
Let’s Chat D2C - The Retention Marketing Metrics You Need to Track
Retention marketing has never been more important and is the backbone of a successful DTC brand. No matter how successful you are with acquiring new customers, you're in trouble if they’re not sticking around. You need to be tracking a handful of metrics to monitor your business's retention performance.
Customer Retention Rate (CRR)
This is the percentage of customers who stick with your brand over time—primarily used by subscription brands.
Customer Retention Rate = ((End # of customers - New customers gained) / Starting # of customers) x 100
For example, let’s say your business ends 2023 with 2,000 customers, started with 1,500 customers, and gained 1,000 customers it would be (2,000-1,000)/1,500=66.66%
In other words, 33.33% of customers churn in a year.
Repeat Purchase Rate (RPR)
This is the percentage of existing customers who make an additional purchase during a specific period. It allows you to see what % of your customers from a given time period are repeat customers versus first-time.
Repeat Purchase Rate = (# of Repeat customers / Total # of customers) x 100
Customer Churn Rate (CCR)
This is the percentage of customers who leave your brand over a specific period of time—primarily used by subscription brands. It allows you to see what % of your customers you lose.
Customer Churn Rate = (# of Customers that Left / Total # of customers at start period) x 100
For example, if you had 10,000 subscribers at the beginning of the year but 5,000 left before the end of the year, your annual churn rate would be 50%.
Average Order Value (AOV)
The average amount of money someone spends on your website per order.
AOV = Revenue/Orders
Customer Lifetime Value (LTV)
The total value of a customer. The higher your LTV, the better. You can also use this as a gauge for profitability, aiming for at least a 3:1 LTV:CAC ratio.
Customer Lifetime Value = AOV x Avg. # of purchases x Avg. customer lifespan
Purchase Frequency (PF)
How often do customers purchase from your store in a given time frame?
PF = # of orders in a specific period / # of customers in that period
Product Return Rate (PRR)
What % of products are returning to your business in a given period?
PRR = # of products returned / # of products sold
Customer Loyalty Rate
If you have a loyalty program, this is the % of customers that join your loyalty program. Almost always, customers who join the loyalty program will have better metrics, including a higher LTV. The higher this percentage, typically the better, but I often see brands with very low customer loyalty rates, indicating an opportunity to improve the program as well as make it more of an emphasis in the post-purchase process.
Customer Loyalty Rate = # of customers in the loyalty program / total # of customers
Customer Satisfaction Score (CSAT)
Usually, a simple survey containing a simple 5-point scale or happy/sad face options is sent after a customer has received a product.
CSAT = ((Total scores / # of respondents) / # of options) x 100
Net Promoter Score (NPS)
The gold standard is customer service. Customers are asked to rate on a scale of 0-10 how likely they are to recommend your business to a friend. The higher this score is, the better.
NPS = (Total scores / # of respondents) x 100
Customer Effort Score (CES)
Typically measured on a scale of 1 to 5, with 1 being the most effort and 5 being the least.
领英推荐
CES = ((Total scores / # of respondents) / # of options) x 100
What I’m Thinking About This Week - The Race to Capture Gen-Z’s Attention
The race is on to capture Gen-Z’s attention, and we’ve got 4 contenders: Meta, X (Twitter), Google, and TikTok.
The User Metrics
While TikTok has the least amount of users, they have the highest % of Gen-Z users. In fact, Gen-Z is more likely to use TikTok to search for something than Google!
Meta
During an internal town hall, Zuck recently revealed that Threads lost half its 100 million users. But, they’re not too concerned as they don’t plan to monetize Threads until it’s closer to a billion users.
Reels has over $10 billion in annual earnings across Meta’s apps, edging out TikTok’s worldwide revenues, but the catch is that Reels is significantly more popular with millennials and above, NOT Gen-Z and Gen-alpha, the future.
X & Threads: Text-based Social Media
I’ve personally never been a huge fan of text-based social media, and Gen-Z and Gen-Alpha aren’t either. Only 33% of X users are under 25, which is also significantly skewed towards males (~70%).
Video content is clearly the preferred medium for the younger generations.
Short-form vs. Long-form Content
Assuming video content will continue to be the preferred medium for those under 25, we have two different buckets of video content: short-form and long-form.
Short-form Content: Reels vs. TikTok vs. YouTube Shorts
Each short-form content platform has a maximum length:
Originally, I thought TikTok would take over, and this would be a winner-takes-all environment, but as I wrote about in a previous newsletter, the potential ban of TikTok in the US highlighted the importance for creators to diversify their social media channel mix, and I believe this will keep Reels and even YouTube Shorts humming along.
Long-form Content: Instagram vs. YouTube
YouTube really is the undisputed champion for long-form content. I mean, when was the last time you watched a 60-minute video on Instagram?
My Take
What none of this takes into account is the “cool” factor. Facebook is dying because the younger generations do not view it as a cool product. You also see this impact outside social media; how else did Liquid Death grow to over $100M in revenue selling water in a can?
The platform(s) that can resonate with the younger generations from a messaging standpoint are the ones that will be dominant 5+ years from now.
This Week’s The D2Z Podcast
#71 – Direct Mail & E-Commerce with PostPilot Co-Founder
???Listen Now???
In this week’s episode, I sat down with Michael Epstein, Co-Founder of PostPilot, a direct mail platform for Shopify merchants. Michael has a fascinating background in turning around DTC brands that he’s now applying through a different lens as a Shopify technology partner. Specifically, we explored the following:
?? Making direct mail more efficient, automated, user-friendly, and profitable
?? The nitty-gritty of lookalike modeling
???His experience transitioning from the brand side to the SaaS side
???The future of PostPilot and his plans for the second half of the year into 2024
App Updates & Highlights - Redesigned Slack Experience
If you’re reading this newsletter, there’s a 99% chance you use Slack and your workday revolves around it. There’s a redesigned experience coming soon that will organize work into dedicated views.
Upcoming Events
I’m in Miami for the next few weeks. Let’s connect!
Virtual Assistant, Social Media Management, Amazon Wholesale Product Researcher
1 个月We’ve all noticed how important retention metrics are these days. If you want to keep your customers coming back, you need to see how many actually do and what makes them stick around. Metrics like Customer Retention Rate and Repeat Purchase Rate really show what’s going on with customer behavior. I started using Loyally AI to track these numbers automatically, and it gives some solid insights into loyalty. It’s really about figuring out what works for your audience.
Co-Founder & CEO @ Appstle | Helping level the e-commerce playing field with the most powerful customer retention tools | ex-BCG | ex-Amazon | Mensan
1 年This was really amazing! Loved going through it. Thanks for sharing Brandon :)
Machine Learning Researcher @ UC San Diego
1 年Great breakdown of the important retention marketing metrics! Which metric do you find most valuable for tracking customer loyalty and why? I'd love to connect and discuss further!