Pets improve our lives, so it’s no surprise that when it comes to spending, humans often forego a budget for making their furry friends happy. Many pet owners are focused on improving their pets' lives, with better and more consistent veterinary care, supplements, and premium food/treat products compared to the low-quality brands that used to be mainstays on home shelves. The demand for premium products and quality experiences for our beloved pets has led to explosive growth in direct-to-consumer (DTC) pet brands and stiff competition to be Rover’s favorite toy or treat.
Pet brands also have to contend with the higher cost of advertising on platforms like Meta and Google. Cost-per-click (CPC) and cost-per-mille (CPM) continue to rise, while return on ad spend (ROAS) is going down. In our recently published ROAS Refresh Report, we presented data across all industries utilizing Triple Whale, including industry benchmarks for CPC, CPM, CPA, and AOV.
Across all marketing channels, the Pet Supplies industry has less desirable metrics than the metrics for all industries combined, indicating a tougher-than-average ability to drive sales through online ads:
Pet brands must contend with higher CPC, CPM, and CPA costs, combined with a much lower average order value than most DTC brands. It’s more challenging to acquire new customers than ever, which makes nurturing existing customers a very important strategy to set yourself apart from the pack.
In this article, we’ll outline:
Modern pet owners want their pets to eat well, have the highest-quality toys, and live their best lives. Humans have higher expectations for pet care products, with pet owners often seeking premium, health-focused, and even eco-friendly options for their pets. Additionally, Millennials now make up the largest percentage of pet owners (33%), which means there is a further demand for innovative and customized pet products and services.
Does the modern pet owner (who’s primarily a millennial working remotely) want to leave their cozy home to go to a pet store to get pet essentials? Very likely, no (I say, as a millennial pet owner myself). Over half of American pet owners surveyed said they would visit Amazon when searching for pet products, with other favorite ecommerce platforms including Target, Walmart, and Costco. When it comes to actual DTC pet brands, Chewy was in the lead with 36% of pet-owning shoppers stating they’d visited and purchased from their website in the last 12 months.
We’ve determined that pet owners love the convenience of online shopping, but how do you ensure they keep coming back to you for their pet needs?
Customer lifetime value (LTV) represents the total revenue a customer is expected to generate over their relationship with the brand. In the competitive pet supply market, boosting LTV is essential for sustained growth and profitability. There are a few ways to boost LTV, but to learn about this, we’ll look at one of the most successful DTC pet brands, Chewy.
At the time of Chewy’s IPO in 2019, the brand sold pet products online to nearly 11 million active customers. That many customers can’t be wrong; there’s something sticky about Chewy’s marketing strategy, and we’re not talking about whatever your dog just licked off the floor.
With existing customers accounting for 90% of their net sales in any given period, it’s clear that returning customers are happy to come back for more, time and time again. So, what’s the secret to Chewy’s success, and how can you emulate it in your own DTC store?
We’ll break down how to ramp up your LTV in four different steps:
Not only has the cost of acquiring customers gone up, more recent privacy regulations have adjusted the way we are able to collect information from them.
As the internet becomes more focused on protecting privacy (with good reason), the role of zero-party data, which is data a customer intentionally and proactively shares with a business, becomes more and more important. If you’re creating an environment where customers will proactively share information about themselves with you, it’s the first step to getting to know them better.
Pet brands can make this happen in a lot of fun ways, including quizzes, conversational pop-ups, post-purchase surveys, polls on social media, contests, and creating an account on the website.
For example, a fun quiz example from Chewy is “What Pet Should I Get?” It’s an innocent questionnaire, but results in some powerful information about a potential future Chewy customer, including the kind of pet they’re looking for, how much time they plan to devote to the pet, the kind of space they have available at home, their budget for pet expenses, and their level of cleanliness.
A post-purchase survey is also a valuable tool for gathering data straight from your customer, with questions like “When did you first hear about us?”, “What occasion is this purchase for?”, or “Which of these categories best describes you?” with some options related to the type of pet they currently own, or hope to own in the future.
Armed with the zero-party data your customers provide, you can utilize tools like Triple Whale’s Smart Customer Data Platform to create unique and valuable segments within your database for future remarketing efforts.
In Triple Whale, the Smart Customer Data Platform is built out with some pre-existing segments based on the Recency, Frequency, and Monetary Value (RFM) Model to segment customers based on their past purchasing behaviors.
Some common RFM audiences include:
Using the zero-party data collected in the above step, you can further segment your customer base based on the data they provide. For example, in a quiz about the type of dog owner they are, they answered a question about the breed they own. From the results of that quiz, you can create custom tags for each customer to segment them by dog breed.
To create a segment based on customer tags, you visit the Segment Builder and create a segment based on the customer tag being equal to the dog breed, in this case: Dachshund.
There are plenty of ways to go deeper in segmentation based on the zero-party data you collected. For example, you can create a segment of Dachshund owners who made a purchase more than 90 days ago to remarket them specifically with your brand new toy that appeals explicitly to the breed.
Additionally, you can utilize data from marketing platforms in the SCDP to create more detailed segments. For example, you might want to target Dachshund owners who purchased within the last 30 days and also clicked an ad on Facebook.
Depending on the products you sell, and the price-point or quality expectations of your products, you might have different demographics you serve. The key is to pinpoint the right demographic to target in your marketing.
Most pet products are consumables: Think about doggy waste bags, toys that they shred within a few minutes, food, and medication. Customers will almost always need to make a secondary purchase, and offering subscriptions can help a DTC brand stand out in a competitive market. Regular deliveries allow the customer to set it and forget it, which is super convenient in today’s busy world.
Triple Whale enables you to track subscription revenue from Recharge, the leading subscription management solution for DTC brands. In the dashboard, you can view active subscriptions, new subscribers, reactivated customers, average MRR per subscription, and more - for a clear pulse on how your subscription service is performing. Additionally, the subscription data is synchronized with the Triple Whale platform, offering a unified view of customer activities and subscription metrics.
In Triple Whale’s https://kb.triplewhale.com/en/articles/5725663-customer-cohortsCohort Analysis tool, you can create custom filters to investigate the customer lifetime value (LTV) of specific cohorts. For example, a custom filter on subscription first order will show you the long-term LTV of those new customers.
You can reduce churn (and therefore boost LTV) by investigating cohorts that subscribe for a few months and then cancel their subscription; there is some reason why they have chosen not to renew, and by uncovering it, you can prevent it from happening with other customers in the future. You can learn a lot from the customers who leave your subscription flow, so use that information!
On the other hand, you also have information about the products that customers purchase as part of a subscription, and therefore these are the best options for remarketing efforts.
You’ve got the data necessary to pinpoint which product, when purchased first, results in the highest LTV customers.
One way to do this is to utilize Moby, Triple Whale’s AI team member! Moby understands your data, and therefore you can ask questions in plain English to pull important metrics, build reports, and gather insights.
Ask Moby something like:
“Over the past 365 days, which product when purchased first resulted in the highest LTV?”
Moby will generate a response based on your store data, and produce a response like this:
Over the past 365 days, the product that resulted in the highest Lifetime Value (LTV) when purchased first is the X-Large Premium Dog Training Potty Pads - with an LTV of $1343.68.
Here are some other notable products and their LTVs:
Armed with this valuable information, you can choose to market these specific products to new customers, knowing that these purchases often attract the kind of customers who keep returning for more!
One of the best ways to drive LTV is to provide an experience that a customer would love to repeat, again and again. For example, Chewy sends birthday cards to pets, which fosters a sense of community and belonging. You can send exclusive offers to your customers, ensuring they are targeted and relevant to the customer in question (for example, you’re not sending Rottweiler-coded products to the Dachshund owner.
Providing omnichannel customer support is a great way to enhance customer loyalty, and promptly addressing any issues will create feelings of good-will. In addition, acting on customer feedback is an ideal way for customers to understand they’re valued. Using Triple Whale’s post-purchase survey, you can gather relevant insights to further strengthen your knowledge of customers and hence the ability to market to them more effectively.
The thriving pet industry presents a unique opportunity for direct-to-consumer brands to excel by understanding and catering to the modern pet owner's needs.
By focusing on customer lifetime value and leveraging data-driven insights, pet brands can create personalized, engaging experiences that foster loyalty and repeat purchases. Whether it's through offering subscription services, enhancing customer service, or creating emotional connections with pet owners, the key to success lies in standing out amidst the competition and continuously adapting to the evolving market trends.
With the right strategies in place, your pet brand can achieve sustained growth and become a beloved choice for pet owners everywhere.
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