It’s been a tough year.
With rising CPMs/CPCs/CPAs (& shrinking margins), macro headwinds (& consumers tightening their purse strings), as well as 101 new shiny objects (like TikTok Shop), we’re seeing less YoY growth for brands.
The game has changed – from relentless pursuit of top line margin, to more careful, methodical preservation of bottom line, with more top brands doubling down on retention strategies to help with this.
Let’s first address the elephant in the room.
Most retention agencies are lying to you.
Email & SMS are not magical bullets that, after a few magical twirls, can skyrocket your LTV and give you a 30x ROI.
LTV also heavily depends on the function of your product, and the need it fills. Simply put, a customer who just purchased a mattress is unlikely going to purchase another in a short window, no matter how good your emails are.
It simply is a supercharger, and deployed in the right circumstances, can help you fatten margins, leaving you with more dollars for profit, R&D, ads.etc
Enter Cohort Analysis:
Cohort analysis helps us identify retention rates for customers who’ve made a purchase. This is crucial, because it allows you to identify the ‘most optimal’ time to deploy emails, making sure your customers are primed for conversion.
And so, we’ve compiled a table across 30 or so brands, with slightly under 1 million purchases – here’s what you should be looking out for in your own cohort analysis.
(get full access to the table, strategies we’ve deployed and crushed with, and trends we’re seeing below)
1) Your Consumers Are Most Likely to Repurchase Within The First 30 Days
We’ve worked with a ton of brands that are worried about ‘bothering’ their customers after the first purchase, opting to ‘give them time’ to try the product before hitting them with another opportunity to purchase.
It sounds counterintuitive, but data doesn’t have feelings. That’s why it’s crucial to nail your New Customer Nurture (NCN) flows, not only providing an Amazon like experience in shipping, but also to blend in a mixture of social proof, reviews/guarantees and upsells, which helps add tremendously to total revenue.
2) Locate Your Biggest Drop-off & Place Your Win-Back Flow There
In the case of our cohort analysis (access here), we’ll want to place our win-back flow on month 4 (where most of our whites start appearing).
This is because you don’t want to offer your biggest discounts before that (when the likelihood of them repurchasing is still ‘higher’), instead using it more as a silver bullet before the chances of them returning rapidly decreases.
Alternatively, you can also leverage your ESP platform’s predictive analytics to gauge the best time delay based on your customers’ repeat purchase behavior.
3) Identify Your Month of Outsized Gains
We all know META’s a mixed bag. Some months are great, whilst others are not the best.
Spending more on ‘good months’ is not a new concept, but having the data to back it up will help with improving profitability and LTV.
In our cohort analysis (it’s on slide 34 – get access here), ignoring Q4, you’ll notice that the likelihood of a repeat purchase is highest in months June/July September, with other months keeping relative pace with the rest (note: this is a little harder because it’s aggregated data, but will be easier to spot on your cohort analysis).
This means the chances a customer during June/July/September will spend more on your store is higher vs other months, and that you should be ramping spend/dialing in your campaigns/offers during this period.
If you’ve been following along so far, and like what you’re reading…
Last shameless plug, but definitely check out the whitepaper we put out recently. We’ve spent an absurd amount of time on it, and it has over 34 slides of content, sharing exact strategies we’ve deployed and crushed with (that you’re free to replicate), how we’ve dealt with Apple privacy/bot clicks, and how you can mitigate customer fatigue from email/sms, amongst many others.
Just click below to grab over 6 years of learnings, all for an email.
Enjoy 🙂
