Episode 1: Top customer retention trends you need to follow

Podcast 1

Welcome to our first episode of Retention Chronicles! On this episode, our hosts, Sarah and Mariah, discuss the top customer retention trends you need to follow, such as delivering fast support to customers, using automation where you can, implementing referral and rewards programs, as well as KPIs and tools you can use to evaluate and accelerate growth! We cover some fun stats that may surprise you so stay tuned for the fact check at the end of the episode for all your resources in one place. Be sure to subscribe and follow Malomo on social media to share your thoughts and stay up to date.

Transcript:


SPEAKERS

Mariah Parsons, Sarah Leitz

Mariah Parsons 00:00

Hello, and welcome to Retention Chronicles, a podcast sponsored by Malomo, a shipment tracking platform that helps ecommerce brands turn order tracking from a cost center into a profitable marketing channel. Here at Malomo, one of our core values is to constantly be learning about something new. So our Marketing team consisting, of Sarah Leitz, our Head of Marketing here at Malomo, and I'm Mariah Parsons, and Orr Fellow working with Sarah on the marketing team have set out to do exactly that. And we hope that you join us, we will be discussing everything that surrounds customer retention, what it is, why it's important, how it fluctuates, how it grows, what you can get out of it, and so much more. On this episode of Retention Chronicles, Sarah and I discuss the top customer retention trends you need to follow, such as delivering fast support to customers, using automation where you can implement referral and reward programs, as well as KPIs and tools you can use to evaluate and excel the growth of your customer retention. During the episode, you'll actually hear us discuss all of this and stay tuned after our conversation, to hear us fact-check ourselves and give you all the information on the tools we referenced, we do the work, you do the listening. And with that, let's get started. Okay, so welcome and you are joining us for Retention Chronicles. This is our first podcast. We are with a company called Malomo and we are a shipment tracking platform that really allows DTC and E commerce brands on Shopify to expand and to really dive into their customer retention strategies. So today, that's what we're going to be focusing on. But I wanted to welcome Sarah, who's also joining me today. So hello, Sarah.

Sarah Leitz 01:52

Hey, how are you?

Mariah Parsons 01:54

Good. We will, like I said, be diving into customer retention strategies. But we thought first that we should explain what customer retention is. So Sarah, if you would like to dive into that, that'd be great.

Sarah Leitz 02:06

Sure, I mean, customer retention is exactly what it sounds like is keeping customers getting them to have repeat purchases. If you're a subscription company, it's getting them to continue to have those subscriptions. If they just purchase an item of clothing, if you're kind of like a an apparel outfit, it's having customers come back again and again. And making sure that those customers are happy enough to come back.

Mariah Parsons 02:31

Yeah, exactly what I've learned in this space has really been taking care of you know, each customer through their customer journey, and really engaging customers. So when they do purchase from your store, it feels, you know, not just like you are only a customer to each brand. And I think that's why there's been a shift in acquisition, to more focusing on customer retention. And you know, in this space, we there's been some research of acquisition costing way more than customer retention. And so I've personally seen that that's why one of the big shifts has been happening, but what would you say are other, you know, reasons that there might be a shift in focusing on customer retention?

Sarah Leitz 03:19

Yeah, I mean, I think some of the big things are a lot of these privacy changes that have happened with Google and Apple. You know, in the past, people have spent a lot of money on acquisition, acquiring customers, you know, through ads, through all of that fun stuff. But when they don't have access to a lot of that information, it's hard to really target ads specifically at the right people. So you have to look at different ways to think about how are you going to continue to grow. And yeah, retention has always been a big thing. You want to make happy customers. And that's a really great way to grow. But it's becoming even more important. I was even- I forget where it came from. But I read a stat about, if you grow retention, even by 5%, it could add 25 to 95% of revenue to your bottom line, which is huge. And you think about that, if you continue to get customers to come back and back then you don't have to do as much work and spend as much money compared to trying to acquire those customers in the first place.

Mariah Parsons 04:22

Yeah, and I feel too you know, for subscription-based platforms as well, customer retention is really important because you want to have those customers be really, you know, satisfied and keep them coming back. So that's one of the reasons as to you know, why customer retention is so important to focus on because, you know, sometimes it isn't the main focus and customers on their journey that really sticks out. You know, at Malomo, we always say, one bad shipping experience, or post-purchase experience can really turn a customer away from your brand. And of course, that's never what we would like to do. So I think for brands to be intentional about what they focus on and trying to put themselves in the space of being a customer is super, super important.

Sarah Leitz 05:16

Yeah, absolutely. And now, especially with a lot of these DTC brands, it's hard to predict that revenue. But if you can really have a high level of acquisition and retention, and then even with those subscription companies, then you can start predicting your revenue better. And you don't have as high of peaks and valleys as like a typical may be brick and mortar store.

Mariah Parsons 05:40

For sure, so now that we've talked about customer retention, and why it's important, I'd love to dive into the strategies that brands can utilize. And first, I'd love to discuss, you know, how you can deliver support and why having a good support team for your brand is important. And not only having a quality support team, but also having a fast response time. So, you know, with this, I think sometimes it can be difficult for brands to focus on support, you know, it kind of seems more like a response rather than being proactive. But why would you, if you had to say or pinpoint, why is delivering fast support, really a great customer retention strategy?

Sarah Leitz 06:25

Yeah, I mean, I'm sure everybody's experienced this. But if you have a problem with your order, or, you know, the shipping event didn't arrive on time, or maybe just the product broke or something when you got it, and you don't get a response for months, it's a horrible experience. Most people will be like, Fine, I'm not coming back, or I'm gonna send it back and I want my money back or whatever it may be. So it's a huge part of actually keeping customers happy. If you have quick response times, even if it's maybe not the answer that they want, but you responded to them quickly and try to figure out the answer to their solution. Right away, they're going to be a lot happier than if you made them sit for multiple days, weeks. Everybody expects that fast response, I mean, you can get an email that says something was left in your cart, to two minutes or five minutes after you close the browser. But if you don't get somebody responding, when you actually have an issue, then you're going to get a lot of upset people who probably won't come back and purchase from you again.

Mariah Parsons 07:27

Hmm, yeah, that's such a great point that, you know, everyone does expect a quick response with us just being so digital. And like, you know, shorter attention spans maybe with all these different, you know, resources that we have at our fingertips with the Internet. And so I think that is a crucial point of, even if it isn't the exact answer, just relaying that information can be really appreciated from the customer's end, like, I know, it really stands out, whenever I have an order and then receive a package. And it's, you have a very clear, you know, process or communication outline from the brands that you just bought. It's, it's really appreciated from the customers.

Sarah Leitz 08:15

Yeah, I mean, people are expecting it more and more, you may not talk to an actual human being with Amazon. But if you want to return a package, you can do it like three clicks. So you know, and you know, where those packages are, and if something doesn't show up, they immediately send you a replacement one. So people are starting to get used to that experience. And if you aren't able to give them, you know, just as good of, of support and answer their questions as quickly, people are going to look to somewhere else that will.

Mariah Parsons 08:47

Yeah, for sure. And that element of convenience, almost of having, you know, like, it's just one less thing that you have to worry about is, you know, now you have to return a package or you had an issue with it. So that's already an inconvenience of having to go through that process. But it takes a little bit of the lift off when you can have that process be a little bit, you know, a little bit easier on your end.

Sarah Leitz 09:15

Yeah, yep. Absolutely.

Mariah Parsons 09:18

And also too, like we've mentioned issues with that it just really detracts from the brand experience of when you don't have a good support system or good experience, then, you know, the probability that someone's going to order from your brand again, decreases. And, you know, not only does the speed of the support really matter, but also like we mentioned the intent and the quality behind the support. And so I think when customers can tell that there's a genuine care from each brand for their customers that's appreciated as well.

Sarah Leitz 10:01

Absolutely. So I'm like a font of statistics that I don't even know where they came from. I can look it up afterwards if anybody is curious.

Mariah Parsons 10:13

We can have a fact check.

Sarah Leitz 10:14

Yeah, I know, I know. But I have, it always sticks in my mind when you get like a cool number. But for us, it's really impressive too that if, you know, we're trying to offer a better shipping experience, and you know, post-purchase experience after you already acquired that customer. But if somebody has a bad experience, like 84% of the time, they just won't come back, they won't be another customer, they won't purchase again for from you. And frankly, I thought that was even a little low, maybe I'm just a little harsher. If I don't have a good experience, I'm just like that I'll never, I'll never deal with them again. But it makes a lot of sense. If people don't have a great experience, they're just not gonna come back.

Mariah Parsons 10:56

And, you know, one of the issues that surrounds having good support is also a lack of ability or resources, sometimes within a brand of, you know, they have to prioritize other, either other, like missions that they're doing or other projects or other goals. And so sometimes, unfortunately, that is the, that is one thing that can kind of fall to the backburner. And so, you know, as we're discussing retention trends, this could be a way to solve that of using automation, when you can kind of simplify from the brands and of what you can do to ensure that customers are being taken care of, even after they ordered. And so, you know, you know more about optimization than I do. So I'd love to know, you know, what, what are some of the tips and tricks? And what's really worked with automation and kind of saving time?

Sarah Leitz 11:59

Yeah, I think a big part of it is understanding the problems that your customers face. Once you've identified, you know, what are the hurdles that they run into over and over again? And what are some of the biggest areas that they have issues with, you can start to see where are the points that we can help our customers like, if you have, you know, for things that people always ask for, when they reach out to you like, they want to return a package, they want to exchange it, they want to do, you know, whatever it may be, you could start working around those types of topics, maybe having a chat function where you can have them choose what they're looking for have it send them to the right page on your site that tells them how to accomplish those things? Or maybe it's just offering a button right therein, in their email and their shipping emails or something they can find out what they're trying to do right at that point. But there's a lot of different things in different ways that you can try to figure out those automation. And what's awesome is there's a really, there's a lot of really cool AI tools out there who can help figure out those things. And, you know, I know, people there's a lot of argument around whether those tools actually seem like humans, but I think sometimes you just don't pretend you're human. You know, you're chatting and you act like your somebody and then you don't respond right. And you're like, oh, we can't you say your Megan, but Megan can understand when somebody is asking them how to return a package. Clearly, they're not and people will get upset. But if you're like I'm so and so's a bot, let me try to help you. There's a little bit more of leeway there that if they don't understand the language you're using or whatever it might be, they're like, okay, well, it's just a computer that's not a computer trying to pretend to be a human. There's a lot of really great things you can do around automation, but you really can't set that up until you understand the expectations of your customers and the hurdles that they're already running into. So you can help figure those out and figure out faster.

Mariah Parsons 13:53

Yeah, that's such a great point, you know, and I laugh because I definitely fall into the trap sometimes of you know, like thinking or doubting that is a human that you're talking to with the support, but even just setting that expectation and saying like, Oh, no, this is, you know, a robot or something that's automated. I forget what brand it was, but I had an experience when they called it like a cute name, like something like cat-bot or something. And I was like, that is really cute. And you know, it really alleviated any, you know, like possible expectations. Yeah, yeah. And, you know, with understanding the customer problems that your brand tends to see what would be some recommendations that you have on how to do that, you know, what are the right questions to ask?

Sarah Leitz 14:46

Yeah, um, I think sometimes it's if you do have like support tickets systems, you can start looking for keywords that are that people are using and the requests that they're having. There are, you know, those like Word Cloud things that you can put a bunch of different comments in and start picking out where people are really finding some of their biggest issues that keep coming up over and over and over again. Sometimes you have tools where you have dropdowns. And that can show you which ones people are having a ton of questions around. But I think sometimes it's just going back and looking at what people have already submitted either a call or email or whatever format they you currently are using. And then just trying to dig and see where you're seeing patterns. Want to, one of the cool things is there's a lot of different tools out there that can help you with some of those support automation I know one of our partners Gorgias does a really good job, I've used Zendesk in the past, you can start creating knowledge base articles, you can start understanding the questions that the customers are asking and then start building, you know, those quick, automated answers to those questions. And a lot of times you can solve their problems before you even have to talk to a human being, sometimes you can't. But you know, the more you can, the quicker you can get people information, the less work you have for your support team to handle and less overwhelmed they are and the quicker responses customers can get.

Mariah Parsons 16:13

Yeah, I think that's super valuable. Just to understand, you know, there are so many resources out there. And it can seem, you know, kind of daunting to tackle that, especially for smaller brands. And something, of course, we have to acknowledge is that what works for one brand might not work for another. So I think, you know, for brands being able to kind of experiment and like you were discussing, kind of finding out what works for you and seeing what keywords are popping up a lot or, you know, what are the majority of questions that your customers ask can tailor you know, maybe the next step or the next couple of steps that your brand could go into to kind of grow your customer retention? Yep, absolutely. And perhaps maybe more of a delighted experience from the customer side of end is referred referrals and reward programs for customers. Because, you know, that really motivates people to come back. If you have a successful rewards program, I think a lot of the times, brands possibly throw it out there. And it's, you know, it's really hard to actually earn something back on those rewards. So, you know, having something that can increase customer engagement and retention, but also have, you know, an attainable goal is something that I think brands could utilize, you know, way, way more of?

Sarah Leitz 17:42

Oh, definitely. It's funny there, there are so many companies who are doing referral programs and doing them really well. You can offer a lot of different stuff. But if somebody is excited about your brand, you want them to tell their friends, and you want them to be rewarded for telling their friends because then they'll tell more friends. They'll share it more. You know, one of my friends even did that with Robin Hood before, you know, before they did their whole issue and everybody got mad at them. But before that happens, he referred me to Robin Hood, and he got a free stock and I got a free stock. And it was really exciting. And then he told more people and then I wanted to tell people because I knew he got a free stock and I got a free stock. And it really helped them grow. But there are so many different companies who are doing this and doing this really well. I know one of our partners, FriendBuy does a really great job with this, and they can help companies really set up an awesome referral program. But I think a big part of it is, you know, how do you want to reward excited and loyal customers? Do you think that that's an avenue for you to continue to grow? Is it something that maybe wouldn't be cost-effective for you, it's a really great way to grow if you have a big fan base, and people are super excited about it. But if it's a product that maybe they don't want to tell people I don't know what that might be, but who knows, then maybe that's you know, like the best idea to have a referral program and kind of invest in that and maybe it's something more like rewards like repeat purchases and figuring that out. But everything is different for each brand like we've talked about before and it's really just trying to figure out what works for you. But I think right now people are starting to find out that like those micro-influencers those you know, people may be not they maybe they don't have a million followers, maybe they have you know 10,000 super engaged people that those are the people that you want really excited and really happy with your product and offering something like that might be really great for maybe just them or maybe you want to do it for everybody who buys your stuff.

Mariah Parsons 19:51

Yeah, for sure. I think also to like just social media and influencers. I've even just seen such an increase in you know, either people I know, personally, or just something coming across my feed of having those referral programs. And I've caught myself, you know, reflecting on, I'm way more trustworthy if people I know or you know, seemingly real people, you know, air quotes around that. Yeah, someone on my social media page that is actually, you know, putting their name to something and saying no, I vouch for this company, this product, this brand, whatever it may be. And I think that also, that's why you can play into customer retention so well, because not only are you engaging and developing that relationship with whoever is in your referral program, but also with other potential new or returning customers.

Sarah Leitz 20:44

Yeah, yeah, absolutely. I mean, like, I'm, I'm old. And so I'm probably like, slow on the TikTok thing on that I'm not that old, but whatever. I'm older than you Mariah. So but it's so funny, because sometimes you see that on TikTok, where somebody you follow is like, oh, my gosh, use this makeup? And then I go to buy it. And it's all sold out? And I'm like, well, clearly, I'm late to seeing whatever they've posted. But it works. It works really well, if they have really excited followers, and they kind of like, show you how they're using it. And they seem trustworthy. I don't know how many times that's happened to me where I'm like, oh, I want to get that and then it's sold out. So yeah, you can't always predict the things that are going to be that are going to blow up your brand and have you know, if you have one excited person who really wants to promote your stuff, and has a referral link, then who knows? It can happen any time.

Mariah Parsons 21:36

Yeah, exactly. Uh, let me just say I'm probably too old for Tik Tok, too. But I completely agree, I've just, you know, seen the shift of so many more people getting brand ambassador contracts or whatnot. And I do find myself being like, Oh, that is a really good product that I didn't know I needed and it's so easily accessible through my phone, you know, which goes back to a lot of that will change with the privacy changes that we're going to see. And, you know, just not being able to target something specifically to a consumer. Yeah, but yeah, I've definitely noticed, you know, referral programs, I think for a lot of brands, they do work. But of course, like you said, if someone doesn't want to advertise a certain product, then there might be different avenues for different strategies, or maybe it isn't even related to sharing with someone you know, but, you know, if you buy a certain amount of products, and you give it an anonymous review, that could be a referral program or a different avenue for a company to look into. Absolutely. So now that we've kind of discussed some strategies that we've seen be helpful. So one of the things we discuss is, you know, how do you evaluate exactly what works and this is when you can get into KPIs and really analyzing that customer retention. So what would you say have you seen work and doesn't work? Or what would you recommend to brands to use.

Sarah Leitz 23:13

So, I feel like everybody kind of has a different way of measuring their key performance indicators. But across the board, I think there are a couple of things that you want to make sure, you want to make sure that your customer acquisition costs are lower than the lifetime value of that customer. So you know, in other words, that they're purchasing more than it costs to get them as a customer in the first place. And that they're coming back to you and purchasing more than once. I think that's a big thing. And sometimes people have, you know, within a certain time frame, they want people, if they're more of a subscription base, they want to make sure that people aren't canceling their subscriptions, they want to make sure that those subscriptions are in place for you know, months, years, whatever. And sometimes it's about continued engagement. Who knows, it may be a brand like, I don't know, peloton where you might not be purchasing multiple bikes and a treadmill or whatever, maybe it's something where you just want people really engaged, you want to make sure that they're continuing to log in the app, you want to make sure that they're engaging maybe in the Facebook, maybe with your with different coaches in Instagram, or whatever it might be. But there's a lot of different ways that you can, you can make sure that the customers are really excited. And you also want to probably evaluate churn rate, especially if you're like a subscription model. You want to make sure that your customers are, in general, staying with you and then there's not a lot of people who cancel their subscription in certain months. Sometimes, I mean, there could be like a mass exodus because of something- like think about, I'll go back to the Robin Hood example when everything happened with GameStop. And they kind of put a freeze on people trading, everybody got up in arms, and then they had a giant dip and people leaving. Even my husband was like, get get off of Robin Hood sell all your stocks. And I was like, no, I made a bunch of money just playing around and not doing anything. But you know, I mean, it's just funny how sometimes it could be like one stupid thing, one stupid post one stupid commercial, and you could have a giant mass exodus. So I think it's really paying attention to not just the numbers and what's happening, but finding out the reason why. And figuring out why people are leaving, or why people continue to purchase. So when you know, because if you know what's going on, and why people are making these choices, then you can either not do it again, or you can make sure that that's something you do over and over.

Mariah Parsons 25:48

Hmm, yeah, I think that's great, you know, Outlook to take of having all these expectations, but being able to move also with, you know, what's happening within each brand. So with that, yeah, that's, that's such a great point of emphasizing how something can change and that you need to pivot on a point. And like we've seen, you know, your example of Robin Hood of something had happened, and there could be a major change of events or with canceled culture, you know, you never know exactly what's going to happen. But the point that you were saying of finding a reason why that something's happening, not just that it's that it is occurring. I think that's a great point. And that can even go back to one of the strategies we were talking about earlier of the referral programs. So if you see a pattern of, you know, in your subscription model, there are people canceling after their first purchase, because they were honestly just signing up to get maybe a discount or whatever thing. Yeah, yeah. Like that could be a pivot in your referral program. Because, you know, maybe that approach isn't working. Or maybe you can reward customers who are filling out a five-minute questionnaire of, you know, what did they like, what did they like about their experience? What didn't they like, and that could just be another avenue of, you know, for the long term customer retention, helping increase that strategy.

Sarah Leitz 27:17

And, especially, you know, maybe going back to what you're talking about, like the referral and the rewards programs, it's really interesting that I've seen, more and more brands have like a really engaged Facebook group, or I think it's mostly Facebook. But there, a lot of times, they don't even create it, somebody else has created this Facebook group, and a lot of people joined it, and you have super fans in there, and people who are super excited, and sometimes you have people who are upset, but oftentimes, the brand doesn't even have to step in and defend themselves in certain instances, because you have people who have been with the brand a long time are really excited about the brand and will defend them or step up for them. Or you can do support, in many instances, like, 'hey, have you tried this?'. 'Have you done that?'. One of the companies I used to work for, TechSmith, has an amazing, like, an online group where you have people who don't even work from the company answer a lot of questions that are going on, and they and it's, it's super cool to see and you have all these really awesome super fans, and it's a great way to see how engaged your, like core referral group is, and make sure that your biggest fans are still really happy and are still really excited. Because I think sometimes that's one of the big things, too, that you have to watch out for is if your biggest fans are telling you you're doing something wrong, that might be something you really want to pay attention to.

Mariah Parsons 28:41

For sure. Yeah. And, you know, the proof is definitely in, you know, like the numbers or the reviews or whatnot, because that is how, you know, maybe with a brand that isn't what you intended, but it might come across to consumers in that aspect. So you know, like you said, listening to those really loyal customers or just seeing what the masses are saying can be supercritical feedback on you know, where to improve and where to grow from there. And at Malomo, you know, we've, we've really seen some great customer engagement pay off because we've seen customer retention grow. And we always speak about, you know, how we can have a reduction in support tickets. And we've seen brands, you know, reduce those support tickets by as high as 76% I believe so, you know, it really does pay off to have kind of this support and engagement that can help grow your customer retention.

Sarah Leitz 29:44

Yeah, there's, there's so much to be done here. I feel like each of the things that we talked about probably could be its own episode, and maybe we'll do that. But there now that we've been talking for like an hour, I feel like there's so much more to go in-depth on nice things. But each of these areas, retention is not one point in time. It's so fluid. And it's something that is, it's like a really new marketing channel, I think that we're just kind of scratching the surface of what's possible here. And trying to dive into new and exciting ways things, I guarantee that the industry will be like leaps and bounds ahead in the next six months to a year, there's so much more you can do. But it's really just starting to figure out how that's going to change. I know, like, me, and so many other marketers are like, Oh, okay, all of this, all of the industry is changing. I'm not able to track people across apps on iPhones, which is like, by far, the most popular phone platform. So how am I going to target my ads? How am I going to do all of this different stuff, and trying to figure out new ways to grow your revenue is like going to be really interesting. But, you know, marketers have always been super innovative. And everybody's found different ways. So I'm really, I'm really not super nervous about how to keep their jobs, I'm sure you know, it's just going to be different people and different data sources, and you know, having like, zero party data, and making sure that people are telling you their information, so they're not surprised when they hear about different things, it's going to become more and more important,

Mariah Parsons 31:21

Sarah, I think that's a great point. And, you know, like you said, we can dive into these topics and each strategy and really, probably talk about them for an hour each are but I completely agree this is such a new avenue for marketers and ecommerce brands to really start focusing on and we are, you know, coming up with these privacy changes that I think is making a lot of the push, but even just beginning to talk about and tackle all these retention strategies and whatnot has been great. And I know I've learned so much, so I cannot wait for our next episode of the Retention Chronicles. Thanks again for talking.

Sarah Leitz 32:04

Yeah, thanks Mariah

Mariah Parsons 32:08

And now it's time for the fact check. So I first chatted about the difference in cost between customer acquisition and retention. And this I read in the Harvard Business Review, and they published that acquiring a new customer can cost up to five times more than retaining an existing customer. And closely related to this, Sarah doubted herself at first, but she did indeed get the facts right. She referenced the research done by Frederick Reichheld at Bain and Company, where increasing customer retention rates by 5% alone increases profits by anywhere from 25 to 95%. And a little bit later on in the episode Sarah also references that 84% of customers who have had just one negative experience in shipping are unlikely to return to that brand. And it was Convey Inc. that published that finding. The last statistic of the episode was a fact that I brought up and it's from Malomo where we have seen a 76% reduction in support tickets once implemented with Malomo. We also wanted to give a quick run-through of the companies we mentioned in the episode and exactly what they do. Sarah mentions Gorgias and Zendesk, which are ecommerce help desks for a brand's customer service, FriendBuy which is a referral platform that accelerates customer engagement and loyalty, and TechSmith which is a software company for developing screencasting and video editing. So this is the end of our fact check but we hope you'll subscribe and keep coming back to learn more along with us. Make sure to comment and tell us your thoughts. We absolutely love hearing from you.