After two years of massive e-commerce growth, DTC brands are putting more emphasis on retention.
During the pandemic, many direct-to-consumer brands received an influx of new customers as more and more people shopped online. Since then, many have turned to various strategies to keep those interested customers coming back.
What makes for a good retention rate varies depending on the category and how often customers want to buy certain products. And while retention may have had some definition in 2019, brands are reassessing what the word means and why it matters in 2022.
Several executives sat down with Modern Retail and shared what retention means for their brand and what their action plan is to extend customer lifetime value. Many brands are turning to tactics like bundling options and new styles to generate more sales from their existing customers.
Focus on evergreen selection
High-end t-shirt brand Goodlife Clothing is one brand that has focused on honing its loyalty strategy over the past year, rather than acquiring more digital customers.
Andrew Codispoti, co-CEO of Goodlife, told Modern Retail that the brand’s current retention rate is nearly 50% – defined as customers who place another order. within four months of their first purchase. It is higher than the apparel industry average retention rate of 26%, according to recent data from McKinsey. Additionally, Goodlife’s online return rate is 8% while in-store it is 2%, Codispoti said.
Codispoti said the company’s loyalty strategy is centered on convincing new customers to complete their wardrobes with Goodlife products.
“We achieved this by creating a core collection of evergreen items,” such as plain tees, henley shirts and tank tops, Codispoti said. “That’s mixed with 20% recurring seasonal pieces that we market heavily to our core customers.”
The brand has also just launched a try before you buy program, called “Try Now”, where the customer’s payment method is not charged until seven days after their purchase. “This is for those who are hesitant to buy a $60-$68 shirt,” Codispoti said. Additionally, Goodlife recently launched a subscription option, where customers can bundle four shirts for the price of three. Codispoti said these services were specifically designed to encourage retention and are promoted to customers soon after they place their first order.
In turn, Codispoti said that on average, the brand’s DTC website receives a second customer purchase approximately 98 days after the first purchase. “From there, the window of time between all future purchases continues to decrease,” Codispoti said, up to 68 days between the fourth and fifth purchase, and so on. “We’re also increasing awareness of our Goodlife recycling program,” said Codispoti, which gives customers credit on future purchases in exchange for recycling their used items.
“Through these tactics, we’re trying to continue to build a cult following around our simple products,” Codispoti said.
Understand the difference between DTC and Wholesale
Kate Lubenesky, president of kitchen products brand W&P, said the definition of brand retention is changing “as we build the e-commerce ecosystem and understand when and where the consumer is buying with us. “. To carry, youa company commuter-focused transportation line reusable containers, are sold at Bed Bath & Beyond and Target, among other retailers.
However, the official website becomes important for the company’s strategy to retain customers. The DTC site is the primary channel W&P can monitor and get nuanced insights, Lubenesky said. On the other hand, selling through mass merchandisers—while helping to create brand awareness—makes it harder to assess which W&P products appeal to customers.
For example, when customers buy directly from W&P’s site, the company looks at consumers “who come back within one to six months and buy additional products that complement or expand their initial purchases,” Lubenesky explained. She added that the company’s most loyal consumers tend to dip their toes with a small first purchase, usually consisting of a single product or a small batch. “We then see them come back to buy larger lots or expand their collection of complementary products or similar colorways,” Lubenesky said.
W&P’s gift items — like craft cocktail kits — and its Isolation Collection — which includes food bowls and coffee mugs — are another big draw for existing customers. “We’ve seen great repeat purchases on items like Porter bags, where the consumer builds on an initial purchase by adding them to their cart,” Lubenesky said. “We also always give away our email, text and social media post early access to new products, limited edition colorways, gifts with purchase and other perks that keep them engaged,” Lubenesky explained.
In turn, retention on the brand’s website has increased over the past few years as its collections have expanded. “In the first quarter of 2022, we saw our AOV increase by more than 20% year-over-year as more consumers engage in one-stop-shop behavior,” Lubenesky said.
Offer a range of benefits and programs
Over the past two years, Brooklyn-based coffee roaster Partners Coffee has seen significant growth in both its digital channel and its wholesale partners.
The brand’s cafes have been around to some extent since 2012, having started as Toby’s Estate and rebranding as Partners in 2019. In 2020, the company launched a direct-to-consumer site, through which it sells packaged coffee beans, brewing equipment and teas online. Partners Coffee also signed up and saved the program that year, which offers 10% off customers’ first three orders as well as free shipping.
Andrew Costaris, director of customer experience at Partners Coffee, said that “in an age where the cost per acquisition is incredibly high, I would consider anyone who has bought from us before, and then bought again, as a customer. faithful – regardless of the elapsed time between commands. For a hotel brand, the goal is often to create a high level of familiarity and perception that reminds guests to revisit the boutique, Costaris said. “I don’t consider the customer journey or experience with a CPG brand to be any different.”
To complement its physical presence, Partners Coffee has taken a similar approach to its digital retention strategy.
In 2022, about 80% of Partners’ customers on its website are repeat buyers, with the average order value being $36, Costaris said. Subscribers currently represent 64% of Partners Coffee’s DTC business. Therefore, offering more benefits to subscribers is one of the primary ways Partners tries to drive retention. Some of the perks subscribers have access to include membership in the brand’s tiered loyalty program, free delivery and discounts on all new single-origin coffee launches.
But beyond providing benefits, Costaris said another key is getting ahead of any potential customer qualms early on to improve retention. This includes encouraging more customers to write reviews, getting a better idea of what they liked and disliked, and providing great customer service.
“All the tactics in the world can’t compensate for having a responsive customer service team,” Costaris concluded.