Ep 524: The Retention Blueprint for the Four Fundamental Customer Cohort Types | AKNF

0:00It's all killer, no filler. I'm Eric Dick. This is the DTC podcast. And for today's AKNF episode, we are previewing a recent episode of To a Burp, the world's best email and retention podcast hosted by the one and only Jordan Gordon, powered by Pilothouse's email and retention team. In this exciting episode, Jordan breaks down the four core cohort profiles that every DTC brand should understand to shape their retention strategy. These are acquisition-focused brands that need evergreen email gauntlets and not drip campaigns, balanced brands that require structured post-purchase flows to drive second purchases, high-frequency repeat brands where retention is the business, and subscription -first businesses where tripling LTV depends on early and aggressive conversion to auto-ship.

0:45Whether you're optimizing conversion flows, figuring out campaign cadence, fighting churn, this episode delivers the specific tactics you might need for every kind of retention model. So regardless of how you retain, there's going to be something valuable in this podcast for you. I hope you enjoy it and on with the show. And don't forget to subscribe to TWIB ERP, the world's best email retention marketing podcast. Thanks again.

1:24Jordan Gordon:We're going to discuss cohorts and the kinds of retention programs you would set up to match different cohort profiles. This is a classic automated kind of program. Think about campaigns for relationship generation. Don't build 9 to 12 emails all at once. Build 3 or 4 emails. Hey, is this thing working? Are we out-competing our one clean funnel? Find the reason that someone would want to be on your campaign program in the first place. This product must have a subscribe coupon in the package.

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3:12Jordan Gordon:It's the world's best email retention podcast, and I'm your host, Jordan Gordon. We are a member of the DTC network of podcasts and the philosophical home of the pilot host email and customer retention team. If you want to make the sweet nectar of low cost revenue a big part of your digital ecosystem, follow us on your favorite podcast app today. This time we're going to discuss cohorts and the kinds of retention programs you would set up to match different cohort profiles. And by cohorts, what we're talking about is when someone purchases, whenever they purchase, how long does it take them to repurchase and how much do they repurchase when they do?

3:51Jordan Gordon:And we're looking at this really high level. We're just looking at purchases and revenue, right? we'll discuss four different profiles, which are kind of of note to us and inform us on how to approach a retention program. And, you know, likely you fit into one of these buckets. The first profile is an acquisition business. You know what? You're just trying to get a first-time buyer because lifetime value isn't a big part of the business. And so there, you're not really setting up a retention program. You're setting up kind of an email and SMS program, you know, but it's really part of your acquisitions framework.

4:25Jordan Gordon:Next, we'll discuss a balanced business. And that's just, you know, repeat purchases are an important part, but they don't come so easily. Then I'd say a classic retention business, which is like someone makes their first purchase and they're very likely to purchase again because they need more or something like that. A replenishment kind of business. And then finally, product subscription, where they subscribe and they get the product every month. So without further ado, let's just go in and discuss the first one. Here we are. We're looking at an acquisition business. For the audience at home, I've got some graphs up here, some tables and graphs.

5:07Jordan Gordon:You can come to find the World's Best Email Retention Podcast on YouTube and see these graphs. But I mean, if you just want to listen, I'm going to talk through it. So it's not a requirement. And we have the exact same setup for the different four profiles we're going to discuss. Now, if we look at the bottom left graph, we just see over time how many people are repeating, right? First quarter, maybe 3-3.5 % of people repeat. And then down to, you know, 10, 11, 12th quarter after first purchase, there's less than 1 % of people repeating. It's not very much. And then in the middle table, we just see over time, there's this kind of accumulative repeat purchases.

5:52Jordan Gordon:And after 12 quarters, yeah, 15 % of people have repeat purchased. And there might be someone who does it more than once in there. So 15 might even be a bit of an overestimate. And then finally, on the graph on the right, we see what happens, the accumulated dollar spend. So on$11 million worth of first-time purchases, we're looking at less than a million, much less than a million in accumulated repeat purchase value over six quarters. So over a year and a half. You know what? Bottom line, repeat buyers aren't moving the needle. So how are you going to set this up? I would not really think a whole lot about campaigns for this program.

6:40Jordan Gordon:I mean, you are going to create campaigns, but every campaign you create, you're going to be thinking about it being evergreen. So we all have to do product launches, and product launches are like, they're not evergreen, because you're not launching that product every day. You know, we all do things like Labor Day Sale, and things like that. Yeah, those are not evergreen. Understood. And so maybe a couple of campaigns you build a month are not going to be evergreen, but every single other one, you know, explaining it, hey, what is this product? It's a one-time purchase kind of product. So, you know, what's important to know about construction, installation, you know, how you use it in everyday life, all those kinds of questions that people want answered, the kinds of questions that, you know, don't get answered in the advertising period.

7:33Jordan Gordon:Like we just discussed with Abe's last episode or a couple of episodes ago, you're trying to connect with people emotionally in the paid ads and then kind of just really flesh out all the features and benefits in email. Yeah, all that stuff. Those are campaigns. And then once you build that campaign, you slot it in and you create a gauntlet. And imagine the gauntlet is like, essentially, it's a really, really crazy welcome flow is what essentially it is. But first two weeks, an email every two days, the next three weeks, an email every three days, the next four weeks, an email every four days, that's 12 weeks, and you're doing like an email every three days.

8:10Jordan Gordon:It's a gauntlet. But you don't have to send it again. You just create it and you schedule it in because you know you're not trying to create that relationship over time. You're trying to increase those first-time purchases. And if somebody really wants to come back and spend some more, hey, great, they can. You know, you are going to send a, like we discussed, a couple campaigns a month. Hey, Labor Day sale. But just, this is a classic automated kind of program. I want you to think about campaigns for relationship generation. Okay? That's what we're going to think about campaigns for here. and we're not trying to generate that relationship, right?

8:54Jordan Gordon:I mean, when you're trying to build a relationship with someone, trying to make a friendship, you don't just come up and say the same thing every time, right? You know, hey, what's new in your life? Oh, this is what's going on. Hey, we're doing this now. We're doing this now. That's an interesting relationship to build. Oh, some interesting stuff. That's campaigns. That's classic campaign stuff. Not important here. so this cohort profile i would probably spend send one quarter as many campaigns as i would say the average brand i audit who has this profile and just focus entirely on this gauntlet that we discussed right flood the inbox for three months okay that's kind of interesting let's go and let's at the next cohort profile.

9:43Jordan Gordon:Let's analyze this. I would say this is very balanced. I mean, obviously these are brands that we represent. So I know there's brand inside and out. I'll just say like about a third of their incremental year-over-year buyer growth is coming from repeat buyers. Super balanced kind of retention business. Hey, a 30-year growth is coming from your base. So how does that look when we look at the cohorts? Well, we can see here, bottom left table, yeah, between 12-13 % of people repeat in the first quarter. You are going to find, if you go look at your cohorts in Shopify, by the way, all this data is just Shopify.

10:23Jordan Gordon:I just took the cohort stuff from Shopify and put it into a spreadsheet, because I'm a spreadsheet kind of guy, and I like to manipulate the data. I wanted to do some cumulative stuff. So yeah, 12-13 % repeat in the first quarter. when you go into Shopify, you'll find lots of people. There's this crazy spike in actually the first couple of months. Um, and you would think, oh yeah, people are going to, you know, tool around with it. And then six, nine months later, make a repeat purchase. You're going to think that's kind of how it works. But you know, in reality, a ton of people repeat in the first quarter.

10:53Jordan Gordon:That's why we want our post-purchase flow to really focus on making someone a repeat buyer within 30 days, which we're going to discuss right here. So that degrades down. And then what do we see? Like six quarters later, maybe between three and 4 % of people are repeating. So we'd have a ton of repeat up front, and then it declines. In the second table, when we look at the cumulative chart, we can see that, yeah, you know, whatever, 13 % are repeating in that first quarter. And then it moves up and up and up and up and up until kind of quarter 12. we're seeing 60 % of people have made a repeat purchase, right?

11:36Jordan Gordon:Now I'd said, yeah, balanced business, right? A third of the growth is coming from, from repeat, but look at how long it takes, right? And we'll discuss on the kind of third panel here, the third graph, we'll just look at the dollar values, the accumulated repeat value. So on about 7 million in first time purchase value at six months, they've achieved over 2 million in repeat value. Sorry, at six quarters, after a year and a half, they've achieved over 2 million. So we're going to say a third, right? So somebody buys and you can expect, someone spends a dollar, you can expect after six quarters, they're going to spend another 33 cents.

12:26Jordan Gordon:Right? Very balanced. Okay, so what do we think about this profile, this cohort profile and how we approach email, SMS, customer retention, maybe other channels too? Okay, this one, first of all, campaigns are going to be an important part. Why? Because you do need to build that relationship. Right? You're going to hit this point where, yeah, two-thirds of the people have repeated, but what did I just say? Twelve quarters? That's three years. That's three years for you to come anywhere close to getting two-thirds of those people to make a repeat purchase. So repeat is an important part of the business.

13:05Jordan Gordon:And since we're seeing this one-third in repeat value, it's starting to reach that point, that very important point we've discussed here in the pod, where it's like, hey, that's like someone spends and then a year and a half later, they spent an extra third, but I spent almost nothing to get that revenue. And so when we kind of add it all together, that's like a quarter of your revenue is low cost. You're sending emails, which are compared to ads, incredibly low cost. I mean, Klaviyo from our, when we work on kind of multi-channel, you know, scaling brands, Klaviyo is about, and this is obviously different from brand to brand, but it's about 10x more cost efficient when you look on a seven-day click, right?

13:48Jordan Gordon:So, yeah, there's a quarter of your revenue had one-tenth of the expense to drive. Look, that's meaningful. Getting that right is what, you know, when we really get down to brass tacks, getting that right is what causes you to succeed and the next guy to fail. Like Peter Thiel says, right, competitions for losers. right? Competition is hard. Competition is hard. You've got to get everything right. Okay? So this is an example, a perfect example, balanced brand. You get retention right, you beat the next guy. If you and someone else are running away from a bear, it doesn't matter if you run faster than the bear.

14:31Jordan Gordon:You just have to run faster than the next guy, right? So here's that profile. So what are we going to do? Well, one, we do know that the repeat purchases are important, but they're not easy to come by. So we are going to have a, we just discussed a gauntlet welcome on the last one. This is a gauntlet post-purchase. So I would set up one primary funnel and everybody with an email address that starts with A through E goes through that primary funnel. They only go through one funnel. And so we can see, hey, what's it like when we try to get someone to buy again through this clean funnel? And if we, maybe I should run these again.

15:15Jordan Gordon:I might dig these up and run these again in another pod, maybe for next week, you know, so we can talk about some angles that work to get someone to repeat. This is more technical. We're not discussing angles here. But you put one-fifth, A through E, it is about 20 % of your addresses, will go through this one super clean funnel. And then the rest, people whose email addresses don't start A through E, I would create one at a time, not all at once. Never waterfall. Don't just create everything all at once, right? You incrementally add. As you see something wins, oh. So I would then add, have people go through a different first email based on their kind of the category they purchased from, or maybe the buyer profile they are.

16:08Jordan Gordon:There's probably some way to segment. You're probably segmenting your customers some way, whether it's product interest or, you know, maybe the landing page they came in on because that landing page matches a Facebook, some Facebook demos or something like that, right? However it is that you're thinking about different products, different customers, split it up by that and put them through two or three different specific paths. And these should be three to four emails. Don't do more than four because after that they're going to just treat the emails like campaigns. People will already be kind of tuned out, right?

16:49Jordan Gordon:And you're going to, you might as well just pick them off with campaigns. We have discussed, really quickly, I'll say again, we have discussed post-purchase before, basic strategy. I'll give it to you again. You want to tier, go from deepest discount to lowest discount, but the deepest discount start is on the high margin things that people, you know, the accessories that people don't always put in their basket. So, hey, you know, you bought, right away you go, look, here's an awesome discount, 25 % off, but it's on like accessories, right? And success, accessory, accessories should have high margin or, or, or stop selling them.

17:25And then put them through one of two paths.

17:28Jordan Gordon:They bought most, the top selling product, sell them the next, the, the, the next best product, or they bought anything but this top selling product, sell them the top selling product. Everybody goes through one of those two paths and give them the next best discount, like 20 % off. Uh, and what we're doing here is we're trying to move them down the catalog. We're trying to say, hey, purchase something from somewhere else in the catalog. And then finally, wrap it up with 15 % off any basket above 150, something like that. So there's your strategy for that kind of main post-purchase funnel. But then you're going to say, hey, you bought this thing, right?

18:04Jordan Gordon:Now we're getting really specific. Here's why this thing is great. Here's the way that you're going to use it to improve your life. And oh my God, here's the best possible thing to go with that, right? Now, we cannot guarantee that this segmented strategy actually beats the primary strategy, right? The one clean funnel. So that's why you start by just sending one, just the first email, right? With an offer to get them to purchase this amazing next item. I recommend first email has the offer. Some people on my team say the offer should go on email to, I disagree. I say email one because email one has the highest click-through rate, right?

18:46Jordan Gordon:It's got the highest chance of someone getting on your site and using that offer. So I say email one. Now, one first new specific email, and then after that, follow it off with emails from the other stream, if it makes sense. And then add a second email, right? And if you can't stage it like that, then build one additional funnel, which is this product, and then build the next additional funnel, which is this product, and see if it can compete. The point is, don't build 9 to 12 emails all at once. Build 3 or 4 emails. See, hey, is this thing working? Are we out-competing our one clean funnel? Oh, okay, then let's keep building on this, right?

19:26Jordan Gordon:And in a perfect world, you turn your one clean funnel off, and you've got 3 or 4 different paths someone go down, went down, and you are very scientific and staged in your approach. You're efficient with your time, You're not wasting any resources. If something's not working, you drop it and you work on something that will work, right? Okay. So that is, first of all, this is this balanced brand. Yeah. This is where you want to do that because that additional purchase, that second purchase, it's important. It's an important part of your competitive advantage, but it's not easy. We can see it's not easy.

20:04Okay. So that's the first gauntlet post purchase.

20:08Jordan Gordon:Second, like I say, campaigns. You do need to build a relationship with this user. You need to talk about, hey, what's new? Hey, this is what we're doing. And if you go back and look at the episode we did with Christina from Heston, where we talked about how they're building a relationship. Great episode to go check out. Please go check it out. Also, while you're at it, make sure you subscribe to the World's Best Email Retention Podcast. find the reason that someone would want to be on your campaign program in the first place right so if you're selling gear talk about tips and tricks how to use your gear if you're selling fashion it's obviously amazing amazing looking models and amazing looking clothes right whatever it is you're selling find find the thing where someone would go oh yeah i'm gonna stay on this because this is adding value to my life.

21:05Jordan Gordon:This is educating me. This is entertaining me, right? This is helping me to be the better person I want to be in some small way. Oh, it's helping me make sure my kids are healthy and safe. You know what I mean? Whatever it is, you need to find that. Because look at this brand. They hit 60 % after three years, right? That's the kind of relationship you need to build here. Okay. Let's do the next one. This is like classic retention business. We see here, just like on the last one, 12-13 % of people are repeating in the first quarter, and it doesn't really drop off very much. Another kind of 10-12 % repeat in the second quarter.

21:59Jordan Gordon:right so in six months you've got like 20-25 % of people have repeated right that's pretty significant right I mean we that was like six quarters on the balanced brand so this brand okay this brand has an easy repeat people are coming back why would people what kind of brand would have this kind of cohort profile uh cosmetics right i mean supplements although supplements would probably be on the product subscribe which the product subscription business which we're talking about next but uh yeah just consumables we got to get more whatever it is whether it's whether it's whether it's whether people consume it or whether it's consumed in industrial uses, consumables.

22:59Now, okay, over two

23:01Jordan Gordon:years, over three years, same view as last time, right? Over three years on that last brand, we hit 60%. On this one, over three years, we hit 70%. So over that three-year timeframe, it doesn't really, I mean, it levels off, right? Where is it different? Okay, well, the first purchase in$3 million dollars worth of first purchases. After six quarters, 18 months, we're at over, so at just under three million in first purchases, we're at just over two million in repeat purchase value after six quarters, after a year and a half. That is essentially double the balanced brand that we saw. So someone spends a dollar, and after six quarters, you can expect them to spend more than 66 cents, something like 68 cents, 69 cents.

23:56Jordan Gordon:That is significant. This is a retention business, right? And if retention fails, you fail. That's just the way it is. So first of all, wow, this business, we can't just talk about email and SMS. You really need to be leveraging social media and every channel you have to speak to customers, right which means not speaking just about you know new customers is like hey this is why we're great this is why we want to be interested in us speaking to buyers saying hey we've got this promo join our vip list right like speak to the customer in these other channels because because so much of your value, you know, we're looking at almost 50%, right, of your value over this six quarter period, it's coming from repeat, right?

24:53In email and SMS, you're getting that repeat pretty easily.

24:57Jordan Gordon:So you don't need to worry about that gauntlet, repeat, purchase, you know, multi, multi funnel. I mean, this one, one clean funnel. And what you're trying to do, just getting to make that second purchase. Just get them to make that second purchase, right? My post-purchase is going to be like, whatever it is, just a nice offer, 20 % off if you, you know, buy again, use recommendations, you know, if you're cosmetics, find the right, find the right cosmetic for them to repeat. But just, just get them to make that second purchase, right? Campaigns are going to be important. Although, I mean, sure, of course create a relationship.

25:39But in this one, it's going to be much more technical, right?