Biggest Suggestion To Early DTC Brands For Extra Revenue Growth
From our research with 100+ DTC brands, we found that the most critical missing part for early-stage DTC brands is customer retention. Explore why customer retention still matters, regardless of the business state in DTC brands.
Apr 16, 2024
Our team has talked to 100+ DTC marketers and owners for research purposes, and we've identified a specific revenue range where they begin to consider both customer retention and new customer acquisition, which is between $5M and $10M in annual revenue. It is quite common for early-stage DTC brands to focus mostly on new customer acquisition for growth. However, another interesting fact is that they are aware of the importance of customer retention and are eager to take action.
According to our research, we've found that the biggest challenge in DTC is acquiring data insights for loyal customers. This aligns well with our findings from the user research mentioned above. The brands we've spoken with have also considered forming partnerships with marketing agencies to address this challenge, even when their annual revenue is less than $5M.
The true value proposition of customer retention
We have worked with dozens of DTC brands around the world since 2021, and according to our research, those loyal customers provide about 3 to 30 times more revenue than others over their lifetime. It depends on the business, but you may find that 2% to 8% of such customers account for 30 to 40% of your total revenue.
In addition, we found that the portion of loyal customers is correlated with the period of business lifespan and, more importantly, with the period a brand has implemented customer relationship management strategies such as loyalty programs, personalized marketing, and exclusive customer service. This means the earlier you focus on customer retention, the larger the revenue you will gain, much like a snowball.
You may have no disagreements on this but still doubt you have sufficient resources to focus on customer retention over new customer acquisition if you are an early-stage DTC brand. It seems to require a lot of analysis to understand your customers and how to encourage them to purchase more than once. Thankfully, we have SaaS solutions that cover all these bases, and email marketing appears to be the first and most easily accessible option to try.
Bring your existing customers back with what they want
The best-targeted email is the one sent to the right customers with the right content at the right times. Retentics develops AI algorithms for its recommendations using three major logics: repeat purchases, most popular but never purchased, and cross-selling & up-selling patterns. Retentics provides auto-curated segments such as those who need something from your brand today, who are likely to churn, who are potential loyal customers, or who are mostly interested in a certain product for promotional marketing. All the customers in these segments will be matched with items to recommend.
The ideal concept of this email campaign is to maximize the conversion rate with a minimal number of recipients, so the revenue is higher but customer fatigue is lower than with generic email campaigns. However, this is not to say that generic email campaigns are unnecessary. They are indeed necessary since sending targeted emails only could be too infrequent for customers to remember your brand. We proved that Retentics targeted emails have at least twice to seven times the conversion rate compared to generic emails, and an additional 7% revenue is generated when both types of campaigns are set together.
Start a Targeted Email Campaign Today with Zero Resources!
There's still an unresolved pain point: the lack of human resources. One of Retentics’ slogans is 'easy to use with zero operational cost for our users.' This value of Retentics allows all our new customers to spend less than 10 minutes from installation to account setup, with all the necessary integrations to send an email. It takes just a few more minutes for our customers even to set up the initial targeted campaign. If you want to optimize your email marketing, all you need to do to get started is request a demo from us today.
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