Retention Marketing Metrics you Need to Track

The TL;DR

• Let’s Chat D2C: The Retention Marketing Metrics You Need to Track - Customer Retention Rate (CRR), Repeat Purchase Rate (RPR), Customer Churn Rate (CCR), Customer Lifetime Value (LTV), Average Order Value (AOV), Purchase Frequency (PF), Product Return (PRR), Customer Loyalty Rate, Customer Satisfaction Score (CSAT), Net Promoter Score (NPS), Customer Effort Score (CES)

• What I’m Thinking about this Week: The Race to Capture Gen-Z’s Attention

• The D2Z Podcast: In this week’s episode, I sat down with Michael Epstein, Co-Founder of PostPilot, a direct mail platform for Shopify merchants.

• App Updates & Highlights: A Redesigned Slack Experience

• Upcoming Events: I’m in Miami for the next couple of weeks. Let’s connect!

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Let’s Chat D2C - The Retention Marketing Metrics You Need to Track

Retention marketing has never been more important and is the backbone of a successful DTC brand. No matter how successful you are with acquiring new customers, you're in trouble if they’re not sticking around. You need to be tracking a handful of metrics to monitor your business's retention performance.

Customer Retention Rate (CRR)

This is the percentage of customers who stick with your brand over time—primarily used by subscription brands.

For example, let’s say your business ends 2023 with 2,000 customers, started with 1,500 customers, and gained 1,000 customers it would be (2,000-1,000)/1,500=66.66%

In other words, 33.33% of customers churn in a year.

Repeat Purchase Rate (RPR)

This is the percentage of existing customers who make an additional purchase during a specific period. It allows you to see what % of your customers from a given time period are repeat customers versus first-time.

Customer Churn Rate (CCR)

This is the percentage of customers who leave your brand over a specific period of time—primarily used by subscription brands. It allows you to see what % of your customers you lose.

For example, if you had 10,000 subscribers at the beginning of the year but 5,000 left before the end of the year, your annual churn rate would be 50%.

Average Order Value (AOV)

The average amount of money someone spends on your website per order.

Customer Lifetime Value (LTV)

The total value of a customer. The higher your LTV, the better. You can also use this as a gauge for profitability, aiming for at least a 3:1 LTV:CAC ratio.

Purchase Frequency (PF)

How often do customers purchase from your store in a given time frame?

Product Return Rate (PRR)

What % of products are returning to your business in a given period?

Customer Loyalty Rate

If you have a loyalty program, this is the % of customers that join your loyalty program. Almost always, customers who join the loyalty program will have better metrics, including a higher LTV. The higher this percentage, typically the better, but I often see brands with very low customer loyalty rates, indicating an opportunity to improve the program as well as make it more of an emphasis in the post-purchase process.

Customer Satisfaction Score (CSAT)

Usually, a simple survey containing a simple 5-point scale or happy/sad face options is sent after a customer has received a product.

Net Promoter Score (NPS)

The gold standard is customer service. Customers are asked to rate on a scale of 0-10 how likely they are to recommend your business to a friend. The higher this score is, the better.

Customer Effort Score (CES)

Typically measured on a scale of 1 to 5, with 1 being the most effort and 5 being the least.

What I’m Thinking About This Week - The Race to Capture Gen-Z’s Attention

The race is on to capture Gen-Z’s attention, and we’ve got 4 contenders: Meta, X (Twitter), Google, and TikTok.

The User Metrics

• Facebook: 2.9 Billion

• YouTube: 2.7 Billion

• Instagram: 2.35 Billion

• TikTok: 1.6 Billion

While TikTok has the least amount of users, they have the highest % of Gen-Z users. In fact, Gen-Z is more likely to use TikTok to search for something than Google!

Meta

During an internal town hall, Zuck recently revealed that Threads lost half its 100 million users. But, they’re not too concerned as they don’t plan to monetize Threads until it’s closer to a billion users.

Reels has over $10 billion in annual earnings across Meta’s apps, edging out TikTok’s worldwide revenues, but the catch is that Reels is significantly more popular with millennials and above, NOT Gen-Z and Gen-alpha, the future.

X & Threads: Text-based Social Media

I’ve personally never been a huge fan of text-based social media, and Gen-Z and Gen-Alpha aren’t either. Only 33% of X users are under 25, which is also significantly skewed towards males (~70%).

Video content is clearly the preferred medium for the younger generations.

Short-form vs. Long-form Content

Assuming video content will continue to be the preferred medium for those under 25, we have two different buckets of video content: short-form and long-form.

Short-form Content: Reels vs. TikTok vs. YouTube Shorts

Each short-form content platform has a maximum length:

• Reels: 90-seconds in-app, 15 minutes if uploaded

• TikTok: 10 minutes

• YouTube Shorts: 60 seconds

Originally, I thought TikTok would take over, and this would be a winner-takes-all environment, but as I wrote about in a previous newsletter, the potential ban of TikTok in the US highlighted the importance for creators to diversify their social media channel mix, and I believe this will keep Reels and even YouTube Shorts humming along.

Long-form Content: Instagram vs. YouTube

YouTube really is the undisputed champion for long-form content. I mean, when was the last time you watched a 60-minute video on Instagram?

My Take

What none of this takes into account is the “cool” factor. Facebook is dying because the younger generations do not view it as a cool product. You also see this impact outside social media; how else did Liquid Death grow to over $100M in revenue selling water in a can?

The platform(s) that can resonate with the younger generations from a messaging standpoint are the ones that will be dominant 5+ years from now.

This Week’s The D2Z Podcast

#71 – Direct Mail & E-Commerce with PostPilot Co-Founder

🎧 Listen Now 🎧

In this week’s episode, I sat down with Michael Epstein, Co-Founder of PostPilot, a direct mail platform for Shopify merchants. Michael has a fascinating background in turning around DTC brands that he’s now applying through a different lens as a Shopify technology partner. Specifically, we explored the following:

💰 Making direct mail more efficient, automated, user-friendly, and profitable

📲 The nitty-gritty of lookalike modeling

😎 His experience transitioning from the brand side to the SaaS side

🚀 The future of PostPilot and his plans for the second half of the year into 2024

App Updates & Highlights - Redesigned Slack Experience

If you’re reading this newsletter, there’s a 99% chance you use Slack and your work day revolves around it. There’s a redesigned experience coming soon that will organize work into dedicated views.

• Home: Shows all channels, direct messages, and apps in a unified, comprehensive view

• DMs: Central all conversations into one place

• Activity: Organizes every mention, thread, reaction, and notification

• Later: Create reminders to manage priorities and to-do lists

• More: Create easy, one-click access to all tools

Upcoming Events

I’m in Miami for the next few weeks. Let’s connect!

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