6 Tactical Ways to Improve DTC Customer Retention in 2023

Welcome to 2023. Ad costs are rising, Meta is glitching and blowing ad budgets, apparently TikTok is getting banned, and TLDR - selling things online isn't getting any easier. With all of this change in the DTC world, one fact remains the same: it is always cheaper to retain a customer, than acquire a new one.

I'll admit it - it's easier said than done. Retention marketing requires time investment (and sometimes cash investment, too). But at the end of the day, when the business gets tough, you want your VIP customer advocates by your side. Their subscription revenue, recurring purchase revenue, and love & support on the internet can help keep the ship afloat on the toughest of days.

Enough of the wishy-washy stuff. Let's dig into 6 of my favorite tactical tips for improving customer retention.

Retention Tip #1: Audit Your Customer Journey, End-to-End

• The Goal: Ensure your brand/product messaging is crystal-clear for prospective & prior customers.
• The Why: Clear messaging helps bring the "right customers" to your brand - those with the potential to become your VIP's. Additionally, messaging clarity helps keep prior purchasers informed, engaged, and excited about upcoming opportunities with your brand.

Auditing your customer journey can be a bit of a tedious process, but it's worth the effort. To complete a proper audit, you must review every touchpoint from first-touch (ex: Facebook ads) to post conversion (ex: confirmation emails & customer support). As you explore each stage of the customer journey, look for statistically significant behavioral patterns amongst folks who did not convert, did convert but have low CLTV, and those who did convert with high CLTV.

I also recommend interviewing customers for each of the aforementioned "buckets" on various stages of the customer journey, and asking questions such as: 

• What stood out to you about our brand/products from the first day you encountered them?
• What makes our purchase experience easy or pleasant?
• What makes our purchase experience difficult or unpleasant?
• Is there anything unclear about our brand/products from our ads/site?

(These are just a starting point for your customer interviews).

From this process, you should be able to glean some learnings to identify areas of optimization not only in your messaging, but hopefully in your customer journey experience as well!

Retention Tip #2: Conduct Month-Based Acquisition Cohort Analysis

• The Goal: Look at the customers you've acquired over a particular time frame, review their purchasing behavior, and map that back to the various marketing campaigns/initiatives you were running at the time of their acquisition. Look for statistically significant behavior patterns to identify which initiatives lead to the stickiest & happiest customers.
• The Why: If you can identify which marketing campaigns, objectives, efforts, etc result in your highest CLTV customers, you should be able to work on a refresh/rinse/repeat model.

In order to do this, I recommend using a data visualization tool like Triple Whale that allows you to compare customer behavior by monthly cohort. From there, I review metrics such as: NCPA, RPR (repurchase rate), time to NCPA payback, # of sales over time, and LTV by cohort. I then review my marketing data (ads, email, SMS, social - everything!) from my highest LTV month cohorts to identify if and how I can replicate that stickiness again. Similarly, it's important to know which months resulted in the lowest LTV acquired customers, so you can dig in to what happened there, too!

Retention Tip #3: Dive Deep Into Your Customer Support Practices

• The Goal: Review how and why your customers are engaging with support to ensure their experiences are nothing less than stellar.
• The Why: One of the easiest ways to burn a bridge with a customer? Offer slow or dissatisfactory support.

Depending on what tool(s) you use for customer support, this can either be easy-breezy or require some serious focus time. I'm a big fan of Gorgias' ecommerce help desk solution, because it offers quick data visualization and easy-to-implement satisfaction surveys.

When analyzing your CS experience, I recommend reviewing the following:

• # of support tickets in relation to sales volume per month
• # of returns/exchanges per month
• # of requested refunds per month vs actual
• average time to ticket resolution
• $ value of upsell/cross-sell tickets per month
• % CS survey response rate
• CS survey response data

If you can find patterns in the above data, you can unlock insights that improve the customer experience, and ultimately, customer retention. For example, reviewing this data may indicate that a particular product often arrives broken or damaged, identifying the need for an alternative packaging format for shipping. Ensuring that more first-time purchasers receive an undamaged product can vastly improve the retention of those customers.

Retention Tip #4: Get Serious About Email & SMS Segmentation

• The Goal: Make sure every text or email hitting your customers' inboxes is adding value.
• The Why: Spam can only lead to two things - an unsubscribe, or a breakup.

There are a billion ways to approach email & SMS segmentation - and frankly, this could be an article of its own. Simply stated, segmentation is light personalization, and personalization adds value. Consider the difference between: 

A) A standardized offer email from a skincare brand, encouraging you to take 10% off your next lotion purchase OR

B) An email asking if you've run out of product yet since it's been a few months, with a code for 10% off that product, + a section on best tips for using your product.

Not that hard, right? One of those is definitely better to open in your inbox.

Segmentation can be built on whatever you find valuable, based on your business. In addition to standard segmentation, I like to build segments based on:

• purchased product type (for sending new product recommendations)
• specific SKU purchased product (for product usage how-to's)
• purchased product reason, collected via post purchase survey (for sending holiday gifting vs self-care style comms)
• birthday month, collected via post purchase survey (for sending rewards/gifts)
• social engagers (for encouraging them to follow brand + influencer accounts)
• SMS VIP (for sending exclusive offers)

This is just the tip of the iceberg! 

Retention Tip #5: ‍Thoughtfully Review Your (or Build) A Customer Loyalty/Referral Program

• The Goal: Make your customers WANT to be a part of growing your brand.
• The Why: This one is a double whammy. People hang out with people that share their interests. Chances are that your best customers — the ones likely the refer your brand — have friends with similar purchasing interests. AKA, you can acquire new high value customers while extending the value of the folks you’ve already transacted with while making them love your brand even more. It’s the ultimate win-win-win.

If you aren’t personally excited about the offering(s) your customer loyalty/referral program provides, that might be a red flag — unless you’re very different than your customer. (But let’s face it, as marketers, we should stand behind the value of programs and campaigns we build).

My hot take? 10% off offers are weaksauce. Reward your customers for referrals or brand social shares with things they can get really excited about: free gifts, solid dollars or percent off, exclusive product drops, and so forth.

If you aren’t sure what an effective loyalty, rewards, or referral program would look like for your customers, ASK THEM! Implement a question in a post-purchase survey, ask your customers on social, or even accept direct replies via an e-mail campaign. When you include your customers in building your brand, they become a part of your brand. And they love it.

Retention Tip #6: ‍Implement “Surprise and Delight” Activities for Your Customers

• The Goal: Make your customers ADORE your brand.
• The Why: This one’s easy. For as long as they can, customers that adore your brand will keep coming back. It’s that simple.

Surprise and Delight can mean a variety of things —sending  VIP customers direct ‘love’ mail, offering them exclusive early access to new releases, allowing them voting on new products in your pipeline, sending digital surprises like iPhone wallpapers, or even accepting submissions for things like product packaging.

One of my favorite tools for improving surprise & delight is Stay.ai. Definitely check it out.

When I worked at First Day, we collaborated with customers and emerging artists to create designs that were featured on the inside of our vitamin packaging. It was a huge hit.

Obvi also does a great job with this — posting polls in their massive customer Facebook community allowing for members to vote on new flavors for product launches.

Wrapping it Up

BOOM. There you have it. 6 hot tips for improving retention, that you can start implementing today. Even if you implement just ONE of these bad boys, good things are to come.

Remember: the cost to acquire a new customer is ALWAYS more expensive than the cost to retain an existing one.

Happy retaining!