While most digital marketers focus a great amount of attention on prospecting & top of funnel, direct mail can be a powerful marketing channel for retention and improving lower funnel metrics. While these individual efforts might have a smaller scale in terms of circulation or impressions given their placement further down the funnel, the higher incremental impact they drive can create a noticeable ROAS lift. As too many brands have come to realize, focusing purely on customer acquisition while ignoring your retention metrics can be a fatal mistake to your business. Compelling messaging, triggered by specific, well defined customer actions can improve downstream metrics in a significant way, helping build a long term sustainable ecommerce business. The Poplar Shopify App ties directly into some of these events in the Shopify Platform, which allows users to send out postcards automatically when specific events occur. In this article we’ll explore a few of the most common use cases for the app, as well as the metrics that can lead to more valuable and engaged customers.
The most popular event triggers:
An easy win for clients, you can enable abandoned checkout retargeting in just a few minutes via our Shopify integration. With a one click install, you can pick whether to target all or a subset of checkouts that will mail a postcard to the customer’s address on file. There’s not much to say other than it works, and it’s a no brainer. Generally users see a high ROI/CAC but are limited by the number of abandoned checkout events they’re getting in Shopify. We generally see a 1-3 percentage point improvement in your checkout conversion rate even when clients already have retargeting on the same events via email and SMS. We find postcards are incremental to the other digital channels.
First Purchase Wins
Generally clients are most primed to leave a positive review and/or make a second purchase soon after their first one arrives. This is a perfect time to increase your customer communication. Some brands focus on prompting them to leave a review on the site or provide a discount on the customer’s second order. Shifting more of your buyers from single purchase only to multiple purchases is about more than just boosting orders — it’s an important step to building a deeper customer connection and develop repeat purchasing behavior. We also tend to see a shift in cart size for these second purchases. If the initial order was to try out your product, now you can move to cross-sell, and/or shift them to higher price items.
Improving cohort composition can feed back into your top of funnel campaigns and allow you to target higher CAC & ROAS than you were before. Maybe before you had some marginally effective but large reach channels like TV or Podcasting that you can now scale into given the improved metrics in your lower funnel.
The conversation doesn’t stop after a customer places their second order, we’ve seen clients send VIP announcements at specific order counts i.e. 10+ 20+, or push out cross-sell promotions, which can be an important method to manage your inventory and build a bigger share of customer wallet. For brands known for a specific offering, cross-sell mailings that hit home after the customer receives the product can be effective at generating orders in categories in which your brand may not have as much mindshare.
Defining and improving important retention metrics
Every business looks at their existing customer performance in slightly different ways, but some of the core principles remain the same across the majority, especially in ecommerce. You need to retain customers, get them to spend consistently and across categories, and ideally act as an organic influencer for your brand. Below are some detailed metrics we’d recommend measuring when running these retargeting and retention campaigns through the Shopify App or manually.
Cohort Performance within:
X day retention rate
While the purchase cadence will vary by brand, one metric that should always be closely looked at is the percentage of first time buyers that place a second order within a specific timeframe. Whether that’s 30 days or 6 months, this metric can be a strong indicator of customer LTV and whether you’ve acquired a customer who will be a long-term repeat customer, or simply came in for the one-off purchase. Customers who have placed at least 2 separate orders with a brand are much more likely to make additional future purchases and the retention rates from 2nd to 3rd order and beyond are much higher. Increasing the 1st to 2nd order retention rate by a few percentage points can have an oversized impact on the health of your existing customer business.
Simply put, this is the average amount on a repeat purchase by your customers (total repeat customer revenue divided by total repeat purchases). Two basic ways to drive up your revenue from repeat customers are to either get them purchasing more often or more per order. For the latter metric, tracking trends in your Repeat AOV can help identify important customer behaviors that influence the success of your business. Marketing efforts from Loyalty programs to tiered volume discounts can be used to increase this metric and get more revenue out of each purchase.
Cross Category Shopping
Your products may not have a consistent margin across all categories, as with many businesses. Amazon famously loses hundreds of millions of dollars on its “loss leader” products in order to retain customers, and drive them to purchase their higher margin products. For example, customers with toilet paper on autoship are likely to add soaps, tooth products and other toiletries. If your business has a core product that drives the majority of new customers, it can often be crucial to then cross-sell those customers to the rest of your business to maintain a healthy margin. In terms of metrics, tracking the % of first-time and repeat customers shopping from multiple categories per purchase is a strong indicator of your cross-sell success.
Net Promoter Score is probably the most common customer business survey meant to measure brand loyalty. Generally understood as asking the question “How likely are you to recommend us to a friend” ranked from 1-10. The score is somewhat controversial, with both fans and detractors. But there is something amazing about distilling down the complexity of a customer relationship into a simple numeric form that you can easily chart. In general, if your NPS is going up, customers are happy and likely to refer more new customers. If your NPS is bad or declining, something isn’t going according to plan and efforts need to be made to increase your customer loyalty.
Cohort Revenue Retention (CRR)
Defined either on a weekly or monthly basis and made up of the revenue each cohort drives in subsequent periods. CRR is tracked as a percentage of first month spend for each cohort. For most ecommerce businesses, the goal is that your cohort revenue retention, while typically lower than month 1, generally flattens and/or even grows over time. A large part of the strategy for DTC companies to expand into nearby categories is to get an increasing share of wallet. SaaS companies would like to see CRR expand over time as their clients grow. This might be counterintuitive since some of the clients in each cohort will churn, but that loss is typically outpaced by the increased spend from retained clients in a good SaaS business.