This piece is formed from Episode #2 of the Blueprint Work In Progress Podcast with guest, Derin Oyekan (Co-founder at Reel).
Why retention is important
Without a clearly defined retention strategy, it’s almost impossible to build a sustainable and scalable eCommerce business. The whole industry has looked at acquisition costs and ways to optimise CAC with fanatical focus over the past decade. This sole focus on acquisition is oftentimes at the expense of a clear retention strategy, which eventually leads to poor unit economics and unsustainable growth. If customer acquisition is the vehicle for your eCommerce business, retention is the fuel. This playbook of scaling acquisition with no retention strategy is now shifting, with many eCommerce brands investing heavily in customer experience, content and community to build strong relationships with their customers as a central pillar to retention online.
Retention isn't rocket science
There is no silver bullet for retention. Because building any business is rarely the same, retention strategies and techniques that work in some industries rarely convert over to others with different demographics and customer behaviours. However, the one core principle that underwrites all retention strategies is an extreme focus on customer centricity. Overridingly, retaining your customers is about caring deeply for them, understanding their challenges, and creating solutions to their issues. It’s about being authentic and understanding there are actual people behind the data that you are analysing, and that sometimes it’s not as black and white as it may seem on a spreadsheet.
Obsessive focus on CX
For example, sitting down with Derin, the Co-founder of Reel, on episode #2 of the Blueprint Work In Progress Podcast we spoke about how they put the customer experience at the forefront of everything they do. Originally built as a subscription only DTC business, early on they experienced huge customer churn after their first or second order. The linear replenishment cycles of the subscriptions they were offering didn’t align with the usage of the product from a customer POV, inevitably leading to product stock pilling and customer churn. By building a close relationship and communication with their customers, Reel found that the churn wasn’t being caused by a lack of demand for their products, but because the experience they were offering wasn’t in line with their customers behaviour. Their customers didn’t want to get tied down to a subscription and wanted the flexibility and experience on their own terms. Based on this customer feedback, Reel shifted to a single “on-demand” purchasing model alongside their traditional subscription, enabling flexibility of purchasing. Interestingly, their customers that purchased on a single order cadence exhibited the same order frequency that was previously available on a subscription, which proved that this idea of putting the experience on the customers own terms proved extremely effective. This focus on customer experience enabled Reel to dramatically decrease the churn they were previously experiencing and build longer term relationships with their customers.
"We were subscription only at the start - as from a DTC perspective it’s a much more predictable business. However, we quickly learned that 40% were cancelling as they couldn’t find a subscription window that worked for them - so we enabled customers to then purchase 'on-demand' as single orders to help reduce churn and create a better experience." Derin Oyekan - Co-founder of Reel
One of the other foundational pillars of retention is in content and community. When you elevate the service or product you are selling with useful and engaging content, you immediately connect with your audience on deeper level. This could translate as engaging case-studies, educational videos with tips and tricks, a social mission that goes further than just a product, or a publication covering stories about your customers, products or services. For Reel, their social mission to provide clean toilets to those in need around the world and their decision to only use sustainably sourced bamboo in their products is at the heart of everything they do. With this, they have taken a previously “boring” household necessity like toilet paper, and elevated it by creating an authentic story that speaks to sustainability and social responsibility. This mission translates to deep customer relationships and a core retention strategy. Retention isn’t just about selling more of your product or service, it’s about putting your customers at the middle of a compelling story you’re telling through content, mission and experiences.
Listen to the full episode with Derin Oyekan here: Adapting to the surge in demand for DTC toilet paper. For more info on eCommerce strategies to boost customer retention, check out our deep dive guide.
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