If you haven't read our customer relationships advice column, go ahead and read it. We'll be here when you get back.
Recently, we chatted with two quickly growing DTC brands about their customer retention stories and how they are building close relationships with their customers. Who Gives a Crap, a cheeky and charitable toilet paper merchant from Melbourne, and Intelligent Blends, a sustainable single-serving coffee and beverage distributor from San Diego, are at different stages of increasing customer retention and lifetime value. Still, both understand the importance of long-term customer relationships and use Daasity to help.
Stellar segmentation, metrics that matter, exclusive toilet paper (and why you should give a sheet)
Jehan Ratnatunga, the co-founder of Who Gives a Crap, emphasizes how much their organization values customer retention: “Retention is absolutely critical for our business,” he says. “We have put a lot of effort into ensuring the customer experience is great and keeps people wanting to come back for more.”
They are investing in customer retention yields higher profits for a business. For Who Gives a Crap, profits are critical, as the organization donates “50% of profits to help build toilets” where they are needed most globally.
Here are some uncrappy tips Jehan has to maximize customer retention.
Tip #1: Sort your cohorts
Who Gives a Crap doesn't let any customer segmentation go to waste. Jehan says, “We look at everything on a cohort basis. We look at how this month's cohort is reordering relative to previous months. As we scale up, we hope to see patterns where cohorts are getting stronger.”
Tip #2: Track the benefits of customer retention metrics
Who Gives a Crap's metric of choice is Percent of Customers Reordering, which shows the percentage of their customers (in each cohort) who reorder toilet paper (or paper towels or tissues) in a given month after their first purchase. This metric pays dividends for Who Gives a Crap, as it allows the company to make more accurate revenue forecasts and helps improve operations processes, such as product inventory.
Tip #3: Different cohorts can require different communication
2020 was a year of many firsts, including nutty toilet paper stockpiling worldwide. For Who Gives a Crap, this meant that demand was exceptionally high, and the company wanted to ensure they could provide toilet paper to as many people as possible. They started taking their usual 48-roll boxes and splitting them into 2×24 roll boxes, so the same amount of stock could satisfy twice as many customers. After panic buying subsided, Who Gives a Crap looked at these panic-buying cohorts uniquely and tailored their communication to make for the best customer experience possible.
Tip #4: Segment further where it makes sense
Who Gives a Crap goes a step further and uses Daasity to track a cohort of customers who are not subscribed but purchase ad-hoc at regular intervals. These customers are “subscribers in disguise,” and they try to tailor the experience accordingly.
Tip #5: Switch it up with limited runs
Many eCommerce companies can benefit from exclusive versions of their products. “It's a way to change things up because toilet paper can be the most boring product in the world,” Jehan says. He adds, “It's a great gifting opportunity where customers can give rolls to their friends and family.”
This customer retention tactic is as old as time, but that doesn't mean it's not reliable to implement in your business. Keeping customers happy, interested, and engaged will never harm your business.
This and all the other customer retention moves that Who Gives a Crap is making are indeed working: business is booming, and it donated four million dollars at the end of 2020!
Keeping customers caffeinated: building customer retention from the grounds up
While Who Gives a Crap has an established and ever-improving customer retention program, Intelligent Blends is in the beginning stages of capitalizing on its potential. Growth Marketing Manager Anna Nason is looking to build a program to take advantage of its momentum and boost customer retention. She says, “We want to ensure that if they're getting coffee, they're getting it all the time.” She is eager to build a robust customer retention program to deepen customer relationships.
Here's how Nason plans to analyze Intelligent Blends' data and build a strong customer retention program.
Tip #1: Follow the money: what are repeat customers buying?
Focus on what products are flying off the eShelves. Suppose customers are coming back to buy the same product(s), and those products are converting new customers into multi-buyers or high-value customers. In that case, it means that they love those products, and you can build long-term relationships with them. This is a golden opportunity for your business to increase customer retention.
For example, if your people keep perking up to buy your dark roast and matcha, consider offering a subscription option. You could even offer subscriptions for all of your products, depending on what you're selling. To go a step further, offer subscription packages, or throw in some good old-fashioned cross-selling (“People who bought X also bought Y”).
Tip #2: Focus on your most valuable marketing channels
Track and study what marketing channels attract customers with the highest repurchase rates and invest more in those channels.
Along the same lines, don't be afraid to reduce spending in marketing channels that aren't doing it for your company. If you have a better chance of increasing customer retention and building long-term relationships through ‘Gram, don't flush your money away elsewhere.
Tip #3: Track accurate LTV, and your company will thank you
Intelligent Blends doubled its LTV value among customers who had purchased within the first year. While this exponential growth is an incredible achievement, it is possible for any company that develops a loyal customer base and consistently increases its Percent of Customers Reordering. In short, higher customer retention means higher LTV.
The Tipping Point
Happy customer relationships and increased LTV are only a customer retention program away, and these tips will point you in the right direction.
If you have started working on a program for your company and are looking to take it to the next level, we might be able to help with our sleek retention dashboard and mighty data nerdom powers.
P.S. Thank you to Jehan and Anna for their time and interviews with us.