The Retention Myth

In modern marketing, it has become almost fashionable to obsess over retention strategies: loyalty programs, personalised marketing, and customer relationship management. These approaches argue that keeping your customers close will naturally lead to increased revenue.

But what if this popular belief is actually misleading?

I often find myself in conversations with founders and marketers who are laser-focused on retention metrics. They pore over loyalty scores and churn rates, convinced these are the keys to their growth.

However, research offers a compelling counter-narrative that challenges this focus called the Double Jeopardy Law. This law tells us that:

This means not only do smaller brands struggle to attract a large customer base, but they also fail to see significant repeat buying behaviours from the few they do have.

So, in conclusion:

1. Retention rates don't dramatically differ between big and small brands.

2. Big brands thrive because they continuously attract more customers.

The truth about loyalty programs

In his book, How Brands Grow, Bryan Sharp also critically evaluates the efficacy of loyalty programs, suggesting that while these schemes may make loyal customers feel recognised, they often fail to significantly alter buying habits or increase purchase frequency.

Essentially, loyalty programs reward those who would have bought anyway rather than converting new buyers. This insight prompts us to question whether it's premature to focus on retention before achieving significant scale.

My verdict: it is.

Let's challenge the fashionable focus on retention and redirect our energies towards acquisition to catalyse true growth and scalability.

But how, I hear you ask…

Here are some strategic acquisition tips for d2c brands:

1. Exploit digital platforms: Utilise targeted ads on platforms like Instagram and Tiktok to reach potential customers.

2. Engage with influencers: Partner with influencers who resonate with your brand to tap into their audiences.

3. Optimise SEO: Boost your visibility on search engines to attract customers actively seeking your products.

4. Implement referral incentives: Use referral programs to encourage word-of-mouth marketing.

5. Develop rich content: Create engaging content that addresses customer pain points, boosting both SEO and brand affinity.

Think about revenue diversification

• Retail expansion: Moving into physical retail can drastically increase brand visibility and accessibility. Consider partnerships with stores that align with your brand ethos.

• International markets: Expand into new geographical areas to tap into fresh customer bases, adapting marketing strategies to suit local preferences. Every brand dreams about scaling into the US - it’s a great one and there are a number of ways you can do it (but I’ll save this for another newsletter).

Just look at what Wild did. They were d2c and UK focused, and then moved into supermarkets and the US…then they were bought by Unilever for a breezy £230 mill. 

Case and point.

Explore less saturated channels to stand out:

DO NOT FOLLOW YOUR COMPETITORS. THINK DIFFERENTLY.

• Direct Mail: Personalised direct mail campaigns can break through the digital clutter and offer a tangible brand experience.

• Podcast Sponsorship & Guest Appearances: Capitalise on the growing podcast market to reach engaged audiences in a personal and direct way.

• Pinterest Ads: Leverage this underutilised platform with visually captivating ads tailored to enthusiasts in niches like health, wellness, and lifestyle.

• YouTube Series: Create a series of informational and entertaining videos that provide value and engage a broad audience.

• Reddit: Engage with niche communities by providing value and insight, particularly in subreddits related to health and wellness.

• Email Newsletters from Non-Competing Businesses: Partner with businesses that share your audience to feature your content in their newsletters.

Through these less conventional marketing channels, you can carve a niche for yourself and build a reputation as a brand that thinks differently. This approach illustrates the power of thinking outside the box - leveraging less saturated channels not just to stand out, but to truly connect with potential customers in a meaningful way.

Story from a start up: By Teddy

I recently had a fascinating chat with David, the Co-Founder of By Teddy, a budding brand in the premium pet care accessory market. They’re still at the early stages, but what really caught my attention was their unique approach to acquisition. It’s a great example of a brand combining customer acquisition with community building.

They’ve taken the community offline with dog walking clubs that echo the spirit of run clubs. It’s a fantastic way to bring people together, share experiences, and yes, show off those stylish pet accessories in action. It’s community engagement at its best, combining fun, fitness, and furry friends. It has viral potential.

Their next dog walking event is happening this weekend, and if you're intrigued (as I am) and want to join in, check out the details here. I’ll see you there!

byteddy

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Closing Thoughts:

As you strategise for growth, keep asking yourself:

1. How effectively am I expanding our customer base while maintaining your current customers?

2. What unique qualities make my brand stand out in a crowded marketplace?

3. How can I think differently about our channel mix to stand out from the crowd and acquire customers in a unique way?

Keep challenging yourself to think boldly.

Stay Bold, Stay Brilliant

Building a business is hard, but you don’t have to go it alone. Need help making bold moves? Let’s chat. Forward this to someone who needs a little inspiration, or drop me a line—I’m here to help.

Let’s make moves,
Beth

• Connect with me on LinkedIn.

• Check out my Fractional CMO service here.

• Got questions or a topic you’d love me to cover?
  Email me at [email protected]

Disclaimer: I share advice from my own experience. Every business is unique, so tailor these ideas to fit your needs.