This spring I worked with Jones Road Beauty on a retention strategy project. Here are three things I found that you can apply to your brand.
This content was originally posted in the No Best Practices newsletter on 05.28.2023.
I talk a lot about how small brands can overdo it on retention. But we’re switching gears today to talk about how larger brands can get the most out of advanced retention concepts like segmentation.
I was fortunate to work with Cody and Eli from Jones Road Beauty on a project recently. We dug into their customer data to get a deeper understanding of retention performance over time and determine what factors were driving customer lifetime value.
I can’t share the specific insights and strategies we uncovered (for obvious reasons), but I can share some of the principles and recurring themes that emerge when I do retention deep dives with larger brands like JRB and Bonobos.
If your brand is doing under $50M/year, don’t drop everything to work on these strategies. Returning customer revenue is a relatively small slice of your pie. Improving your baseline by 5-10% isn’t going to move mountains for your business.
But you can use these learnings to set yourself up for success as you continue to scale.
Lesson #1: There Are Two Paths To Growing Email Revenue. Choose Wisely.
From day 1, JRB made the conscious decision to limit email send volume and promotions. They send 3-5 scheduled emails per week with engaging content that covers brand facts, product education and makeup tutorials.
The brand also uses quizzes as an email capture and shade matching tool and sends a multi-email series to everyone who completes a quiz. Having covered those bases (and several others), JRB wants to build out its post-purchase journeys and other lifecycle marketing touchpoints.
This is where brands often get stuck. What should I put in my journeys? Who should I target? How much should I segment? The possibilities are endless.
Something you need to know before you begin: if you’re sending emails every day, or sending multiple emails every day, journeys aren’t going to do anything for you. At that point, another email send is just noise.
“Just send more email” is a valid way to make your email revenue increase. But the only way to scale the strategy is to…send even more email. So, unless you want an email marketing team of 25+ people (true story from a past life), there is a hard ceiling to this approach.
This is where journeys are so powerful: you build out the logic once, update the creative 2-4 times per year, and that’s it. You’re speaking to customers as they enter your ecosystem, when they’re primed to buy. Not blasting out hundreds of emails per week, hoping for a few incremental orders to roll in.
Because JRB has been so thoughtful with their email strategy to date, they are in the perfect position to realize the benefit of more complex post-purchase marketing.
There were a few moments in the lifecycle that I recommended they prioritize right away: the new customer post-purchase experience, the 2x buyer post-purchase experience, and new customers at risk of lapsing.
Tactical Tips:
- The first 30 days post-purchase are the “make or break” period for retention marketing. Focus your effort here first. Most brands’ post-purchase series are not long enough, and don’t do enough to sell the brand. New buyers are not fully “bought in” yet.
- Resist the urge to add one more email to the calendar when sales are slow. Once you start, it’s hard to walk back. And the only way to scale this approach is through pure man hours.
- Make sure your scheduled sends include a balance of content that will appeal to prospects, newer customers and loyal customers. Prospects and newer customers have less context about your brand, and frankly care less. Make it about them.
Lesson #2: Customers Generally Fall Into Three Segments
A big debate in retention marketing: how much can marketing really influence customer LTV? Our best customers are usually rich, so we’ll never turn the average customer into a best customer. And some customers simply care more about our brand/category than others.
I’ve run customer segmentation analysis on several brands in several categories, and customers usually fall into three behavior patterns:
- VIPs: They come in at a much higher AOV than average and continue to spend more
- “Reactive” Customers: They come in around the average AOV (sometimes lower) but shop much more frequently than average, resulting in an above-average LTV
- Everyone Else: Usually defines the average
JRB’s customers fell into a similar pattern. This led to some obvious follow-up questions:
- How do we make sure to flag VIPs early and provide them the best possible experience? High AOV new customers are “yours to lose”, so don’t flub it up.
- Is it possible to grow the “Reactive” segment without resorting to promotions? (For most brands, Reactive = more promotional than average)
- What differentiates repeat buyers in the “Everyone Else” category from 1x buyers?
One area to investigate: the free shipping threshold. Right now it’s $85. That helps elevate AOV for new customer orders, which improves customer acquisition economics. But repeat customers might come back sooner/more frequently if they could get free shipping on lower AOV orders. This is something worth testing. It’s also the perfect use case for email segmentation.
Real talk time: most new customers you acquire will not repurchase. If you have an excellent product, a differentiated brand and dialed-in retention marketing, you can maybe get 38 of every 100 new customers to make a second purchase. For the average brand, between 20 – 30 customers repurchase.
But when you’re a big brand with a big repeat customer base, shifting your retention rate from 28 in 100 to 32 in 100 can drive millions of incremental dollars. This is where it pays off to understand what products, offers and marketing are most effective at driving LTV.
Tactical Tips:
- Recency is critical. For most brands, the majority of your 2nd purchases will happen within 30 to 90 days of the first. Focus on your post-purchase marketing.
- There’s no better channel for post-purchase marketing than email. But you need to get people to opt in and stay engaged. Test the impact of different email send frequencies on new customer unsubscribes and engagement.
- For those who don’t opt in to email, programmatic direct mail can be incredibly effective. I’ve seen it work for multiple clients across post-purchase, lapsed customer re-engagement and new product/promo announcements.
Lesson #3: Product Reveals A Lot, But Not Everything
If you’ve been able to scale your brand past $50M in eCom revenue, you probably have a hero product or category. This is your top seller, and it can drive anywhere from 20-80% of your revenue (this will vary based on the breadth of your assortment and your product category).
JRB’s hero product is Miracle Balm (quick shout out–I have been a JRB customer since 2021 and wear my Miracle Balm almost every day). More than half of JRB’s new customers include a Miracle Balm in their purchase.
For many brands I analyze, sampling the hero product/category correlates with repeat purchase. In these cases the prescription is simple: feature the hero product/category in paid ads and feature it heavily in post-purchase marketing for new customers who didn’t buy it.
JRB is a bit different. Customers of all types–from VIPs to “one and done” shoppers–purchase Miracle Balm at similar rates. So it’s not as simple as Miracle Balm = more repeat purchases. There is something else going on below the surface.
JRB collects a lot of zero party data with quizzes. I recommended that they analyze how different zero party data points correlate with Miracle Balm buyers who repeat purchase, and who have higher LTVs.
For example, women with dry skin may value Miracle Balm highly because of its moisturizing properties, making them more likely to repeat purchase.
Once those relationships emerge between customer values and lifetime value, JRB can incorporate those themes into their acquisition and retention marketing. For example–a UGC testimonial and a landing page dedicated to makeup for dry skin.
This will help the brand bring in more customers who are primed to repeat purchase from the start. Acquisition and retention work best when they support each other.
Tactical Tips
- Figure out what your hero product/category is now, no matter how large or small your business is.
- Feature your hero product/category in acquisition marketing to improve your advertising efficiency. Make sure it has an evergreen spot on the homepage too.
- Consider splitting your post-purchase series into hero product buyers vs everyone else. Buyers should get product education & SKU expansion messaging. Non-buyers should get an intro to the product and why it’s so great.
- Consider asking your customers why they value your category (not brand, category) and map that to repeat rate and LTV. You can add this to your post-purchase survey or send in a follow-up email survey.