🧠 CHAPTER 3: The Modern Buyer Brain: ACQUISITION = RETENTION

0:00OmniSend just shipped something that I've always wanted. You can now connect OmniSend to ChatGPT or Claude and just say, where can my email and SMS campaigns be making more money? And it actually figures it out. It reads your store data, all your campaign details, your store history, and it tells you and the insights are legit good. And even better, you can then say, okay, let's fix that or build that campaign. And it actually does it right from your chat. It's wild. Now, if you're one of our listeners, you can get 30 % off for three months on OmniSend. Just go to the show notes. There's a link there.

0:31Or you can just use the code J30, J-A-Y-3-0 when you sign up. Now, if you're using another email and SMS platform and you want to switch to OmniSend, which is a great idea, they will do the migration for you. Just give them five days and then you show up with everything set, ready to go. Now, they've migrated thousands of stores from Klaviyo. And on average, they're saving 35 % on their email and SMS bills. If you're listening to this show, you clearly care about your Shopify business. If your store isn't backed up and protected, it could all be for nothing. That's why I tell every store owner I know who cares about their business, you 100 % need Rewind installed.

1:07It's a non-negotiable for me. One bad CSV import, one app that edits your store the wrong way, which has happened to basically everyone I know. One bulk edit gone wrong, and now AI making changes for you. Listen, Shopify does not have an undo button. Rewind is the undo button. Go to shopify1percent.com slash rewind for 30 days free on us. Links in the show notes too. Let's get right into this one because this is one of the biggest misconceptions in all of e-commerce. The title of this chapter, chapter three that we're on, remember we're doing a series here of 10, is acquisition equals retention.

1:52If you just remember that headline, you're better off for listening to this episode already. But let's dive into it. For years, and honestly still today, marketers love to split budgets and teams into two neat, tidy buckets. Acquisition over here, retention over there. And acquisition has a budget and a team and people, and there's a retention team and budget and people. Two completely different strategies, two different KPIs, two teams, and often two totally different world views, how they see the customer. But here's the reality that nobody wants to talk about. Acquisition is retention. They're the same thing.

2:33They're two sides of the same coin. The biggest retention problems most brands have is actually their acquisition strategy. You acquire the wrong customer, no amount of fancy cancellation flows, save offers can rescue that relationship. You can't save someone who should have never been there in the first place. And this is where D2C gets it backwards. Brands spend 80 % of their budget on acquisition. They blast ads like they're playing whack-a-mole, the optimized A-B test for cheap first purchase to think that that's actual return on ad spend. But then they act shocked when their churn is 12 % a month.

3:13If you acquire poorly, retention math becomes impossible. Let me say the line I said in the interview. And remember, this is all based off of a full interview I did. If you bring in the wrong customers, no churn tactic can save you. And I want to unpack this. Cheap acquisition creates expensive churn. Here's the trap. Brands celebrate CAC, customer acquisition costs. Like it's the Super Bowl. Like I see people wear, I've seen people wear t-shirts, small CAC club. I love it. I think it's hilarious. Look, we get customers for$11 less per subscriber. But meanwhile, half of those subscribers bored at 11 PM hit subscribe.

3:57They churn before their first refill ever even ships. Cheap acquisition means often the wrong customer, the wrong expectation, the wrong promise, probably the wrong buying intent, what that customer actually wants. And once they get the product, that's when the disappointment starts. Now you can throw discounts at them. You can throw crazy offers. You can block cancellation. You can have cancellation flows, which you 100 % need to do. You can send emails begging them to stay. But at the end of the day, it doesn't matter. If you acquire customers who aren't aligned with your product, your brand, or more importantly, your membership experience, retention, it's really a mathematical death sentence.

4:40Like you won't be able to get out of it. Now, retention isn't a later thing. It's not something you do later with the customer. It's actually a front loaded thing. And here's where onboarding is where retention actually begins. Your retention team should be your onboarding team. So let's talk about the part that most brands completely ignore. The moment immediately after checkout. You know, there's that moment, there's a biochemical gift. I like to tell some brands. It's when someone clicks that checkout button, there's a dopamine spike in their brain. It's a reward loop. The endorphins are released.

5:15And what most brands do in that moment, we've talked about this before. they send a bland order confirmation email, maybe one thank you email after. For most, it's just the order confirmation email. And even though it's one of the most boring, plain emails in the world, do you know what the most opened email on the entire internet is? An order confirmation email. So probably arguably the biggest missed opportunity here. It's the, thanks for your order. Here's your receipt. And then, you know, silence for a week. And by the time the product arrives, all that excitement from that dopamine hit, it's dead.

5:53Now compare that with some of the smartest brands out there. They treat that dopamine like moment, like a once in a lifetime opportunity because it really is. And here's what smart brands do in the first 24 hours. They have the first email. It's immediate. It goes out, you know, reinforce that decision. You made a great choice. Here's why we talked a little bit about this in the last chapter, 30 minutes later. If you want to go deeper into this, go read, listen to chapter two, but email number two, goes out 30 minutes later, show results, showcase studies, testimonials, show outcomes. Here's what here's what you can expect to feel like.

6:23Here's what customers have used this product for. Here's three things people have built with this tool, whatever it is. 60 minutes later, send an email behind the scenes, how it's made, what your company is like. Why, why does it matter how it's made email? Number four, at some point in the same day, notice that first one was immediate 30 minutes, 60 minutes. That's three emails within one hour. And I promise you, your customers will not be upset. In fact, you're actually training them to engage with your content, which not only are you building relationship with that customer, you're actually, because it's the highest opened email, you're actually getting them to open your emails, which then tells their email account that your email is good email.

7:07So it won't end up in the spam or maybe the marketing folder. It'll end up in their primary inbox. So you're actually training their email client to think that your email is what they want to see. And you have that window, that first day, take advantage of it. If you email them these emails a week later, I guarantee you they'll hit spam or unsubscribe or it'll end up somewhere else other than their primary inbox. You know, send a fourth email, set expectations, shipping timelines, like when are they going to get it? What to do when you unbox it? You know, this isn't over emailing. This is onboarding.

7:39This is relationship building. This is education at its finest. and customers are excited for it. Use this opportunity like a gold mine time that you can message your customers. It's a once in a lifetime opportunity with a customer from that first purchase. Once that excitement fades, it's gone. And you can't bring it back. You can't bring it back even with a big discount down the road. You can't bring it back with a big marketing announcement. You only have that moment right after they purchase. You can of course send panic retention strategies and things later, but it's not the same. So retention doesn't start when they threaten to cancel.

8:19This is where most brands get it completely wrong. They think retention starts when someone clicks cancel, but that's not retention. That's emergency triage. I want to call it that. That's paramedic level retention. That's like scrambling to bring someone back to life because you didn't build a strong enough relationship from the start. Real retention begins with aligned acquisition, meaning your customers are understanding what they're buying. You're acquiring the right type of customers. You're acquiring customers who understand your product, who are maybe referred the right way. Retention begins with the right offer.

8:54By right offer, I can get people to convert with some crazy first month offer, but that offer might not be the right offer. it retention begins with expectation setting. It begins with onboarding. It begins with education. But the more someone knows about your product, the more they value it. It's like, this is like one of the oldest tricks in the book. Like when you learn about a bottle of wine, you are willing to pay more for it. If you don't know anything about it, it's a$10 bottle of wine until you know what it's about. Retention begins with emotional connection, knowing more about you, your brand, your company, your story.

9:31It also begins with membership framing, starting that membership journey early on. And this is why I always say acquisition and retention are not separate teams. They're one system, one funnel, one psychology, one customer journey. You don't fix churn in the cancellation flow. You fix churn starting at the ad level, the landing page, the offer, the positioning, those first emails, their first unboxing moment, maybe that first reach out that you do with them. Retention is the sum of every decision you make before the customer's first order arrives. Think about that for a second. Not after three months.

10:15Every retention is the sum of every decision you make before the first order arrives. Ask yourself right now, are you handling that whole journey properly? If not, you're going to have a retention issue. Now, here's the real kind of math behind this. Let me give you a stat that should make you, might make you sweat a little bit, but Bain & Co. did a study and found that increasing retention by 5 % actually increased profit minimum 25 % to 95 % because retention compounds. So not revenue, profit. And also because there's a number of factors that went into the study. If you search Bain & Co. retention study, customers who you retain are five to 25 times cost less to market to.

11:10So when you message them other offers in the future, they're more likely to convert. And this is why increases profit 25 to 95 % just by increasing retention 5%. And so guess what the single biggest driver of that first cycle churn is? We call first cycle churn is they get the first month and then it's that second month. The single biggest reason people cancel on first cycle churn is bad acquisition. That customers bought too fast. They bought without intention. It was a sporadic purchase, impulsive purchase. They bought with the wrong expectation. They bought for the wrong reason. Maybe they were overpromised.

11:52They bought after being misaligned with your product. And retention isn't a backend metric. It's actually a front end strategy because acquisition equals retention, which equals acquisition. It's actually a loop. It goes around. I say this again, acquisition equals retention. Good retention turns into acquisition. because those customers buy more things from you. And so here's kind of the final twist on all this. When you acquire the right customers and you onboard them well, they don't just stick around. They refer. The best customers refer your best customers. Referrals are really the only true way to break out of, I call it the subscription death curve.

12:43I'll put a link to that in the show notes. I've done talks on this at SubSummit and other conferences. But unless you have a healthy referral strategy and program, you will hit the subscription death curve and the subscription death curve. Just picture a graph going up and then flattening. And what that is, is every recurring revenue company hits this at some point. It's no matter if you're acquiring a hundred customers a month, 10 ,000 customers a month, at some point, your churn is going to equal the number of customers you churn a month will equal the number of customers you acquire and you flatline.

13:19The only way to actually break out of that is when your customers refer at least 1.1 customers for every customer that you acquire. And that's when you actually break out of that subscription death curve. that is when your acquisition strategy actually fuels your retention strategy. And then your retention strategy fuels your referral engine. And that's when you get this compounding growth, this healthy growth, and you never flatline. That's when your subscription curve actually turns into that hockey stick that everyone wants. It just goes up and up and up. Watch the talk on that. It's a, it's about a 26 minute talk.

13:55It'll blow your mind. I had so many people come up to me after I did that talk a few years ago and literally say, that 30 minutes made this whole conference worthwhile for me. I actually had some people come up to me after and say, can you do that talk again for me for my whole company next week? I had people linked in messaging me during the talk, like swearing, like, oh my, this is the best talk I've ever heard. It's eyeopening how it actually works. And it's all based on real examples that I did in the talk. So just if you search subscription death curve, it's on our YouTube channel. If you go to the Shopify 1 % YouTube channel and search subscription death curve, you'll see it there.

14:32And so here's the takeaway. Stop thinking of acquisition and retention as two different things. Hopefully that is clear. Acquisition is retention. Retention is acquisition. They're the same. They're all part of the same ecosystem. You don't retain customers by saving them at the door. You retain customers by choosing them carefully, onboarding them intentionally and designing an experience that amplifies the excitement they already have when they clicked checkout, they already have it. You just have to amplify it. Think about that for a second. You don't have to create it. You just have to amplify it.

15:05So retention starts that moment when excitement peaks, not when a customer threatens to cancel. And so here's my, my challenge. I'm doing a challenge at the end of every one of these chapters. Here's my challenge for you with this one is fix retention before it even starts. So five kind of steps to this outline here. One, rewrite your acquisition promise. So audit your ads, go and look at all your ads, what they say, look at your landing pages, look at your messaging. Is the promise aligned with what you actually deliver? If it isn't, you will have a retention problem. Number two, build a smart or dumb customer filter.

15:49And so what I mean by this is like, who is the wrong fit? Who churns fast? Stop acquiring them. Even if CAC looks cheap, stop acquiring them. Look at the customers that have high LTV. They might have higher CAC, but they have much higher LTV. Acquire those customers because they're going to also prefer more customers that look like them. Number three, audit your first 24 hours. Be your own customer. Buy your own product. Subscribe to it. see what that experience is like. Like we get so caught up in the trees and we don't see the forest sometimes. What is, what is your thank you page? What does your email look like?

16:27What are you getting 30 minutes later, 60 minutes later, the same day, the next day? Like just audit it, be a customer, eat your own dog food. As they say, how many touch points are there? How much excitement is there? How much education is built into these? You need to send minimum three emails in the first 24 hours minimum. I will stand by that. That is the hill I will die on. Minimum three emails first 24 hours. I send more, but you, that is a golden opportunity. You will never get back the first 24 hours. You need to send at least three. If that's the only thing you take from this episode, you'll be ahead.

17:03Number four, add one emotional moment. Okay. So this can be something, something that connects them to you. It can be a founder story, a picture of you, a behind the scenes video, a personal thank Thank you, personal video, something that you would classify as an emotional moment that your customer is going to experience with you. Do you even have one right now? Is there any emotional moment or is it just transactional? So just add one. That's my challenge. It's ideal, of course, if you have more, but my challenge is for number four, add one emotional moment. And then number five is remove friction before it becomes a frustration.

17:45And what I mean by this is like clarify when, when someone places an order, clarify the delivery timeline, like don't even the customer should never even have a chance to become frustrated, to guess, to be confused, set expectations. Like, what is it going to be when they open it? Send them information ahead of time. If you think there's forums, they need to join. Like I just bought a 3d printer and I actually, it wasn't the greatest experience. I, the order confirmation email was very bland. And I already know that I'm, I think I'm going to need to join some forums and communities to, to download the templates for these 3d projects, but I don't know where to go.

18:24I would have loved to got an email that said, here's five communities you should join. Here's how you're like, I was super confused. I'm this is my first 3d printer and I have no clue. I know some of you listening are going to be like, oh my gosh, it's your first 3d printer. But that was a huge, huge miss on this company's part. Set expectations, give control. this one I think goes without saying but like before friction even starts in managing a membership and a subscription to give control give options remove any surprises because when you do all this acquisition becomes retention retention becomes growth and the churn stops being a fire you have to put out and it actually becomes a signal that you rarely see it's not it's a symptom that just goes away that's it for this chapter chapter three make sure you join me on the next one, chapter four, we're going to unpack another, another part of this whole modern buyer brain journey that we're on.

19:16Hope you're enjoying these. If you are, make sure you leave a positive review in the comments, not the comments, in the comments or in the whatever show you're listening on. Thanks so much, everyone. See you on the next one.