#163: Why Retention is the new Acquisition
In this episode of the Ecommerce Coffee Break Podcast, I chat with Danielle Butera of yotpo.com, about the latest business trend: Retention as the new Acquisition. We dive deep into the reasons why focusing on customer retention is becoming increasingly important for ecommerce businesses.
On the Show Today You’ll Learn:
- What is retention
- Why is retention the new acquisition
- How to keep a customer
- How to bring a customer back to your store
- How does SMS marketing improve customer retention
Links & Resources
About Our Podcast Guest: Danielle Butera
Danielle Butera is a seasoned marketing professional with a decade of experience in traditional, digital, and ecommerce marketing agencies. She joined Yotpo in 2021 and now serves as an expert in building and enhancing the company's Digital Marketing Agency Partnerships. With a deep understanding of SEO, paid media, email/sms, and CRO strategies, Danielle helps these teams leverage Yotpo's solutions to achieve their clients' business objectives. Her collaborative approach helps boost retention rates and overall ROI, creating a win-win for Yotpo, agencies, and brands alike.
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Claus Lauter: Hello, and welcome to another episode of the E-Commerce Coffee Break. Today we want to talk about retention and why this is the new acquisition. Now everyone knows that acquisition costs are going through the roof, and that's not going to change anytime soon. It only gets more expensive. Therefore, retention and keeping customers must that you already had is a most [00:01:00] important point in every merchant.
plan. So talk about that. I have Danielle Butera with me. Danielle is a, has 10 years of experience in traditional digital and e-commerce marketing agencies. Prior to joining George Paul in 2021, she now specializes in building and strengthening yacht post's, digital marketing agency partnerships. By helping s e o paid media, email, s m s and CRO teams understand how your tool can help them achieve their goals for their clients.
So let's welcome Daniel to the show. Hi Danielle. How are you?
Danielle Butera: I'm doing well class. How are I'm
Claus Lauter: good, thank you. Danielle. As I mentioned, retention is a big topic for a lot of merchants and it's not the easiest topic to get into because there's so many different ways on how to keep a customer, how to bring a customer back to your store.
You wanna dive a little bit more into that? Maybe to start with, give me an overview. What's your understanding of retention?
Danielle Butera: Cost of acquisition is going through the roof. We know that a lot of brands are spending more only to gain less, , in terms of, acquiring new customers.
, so that shift to retention has really been, , the [00:02:00] focus for a lot of brands. , we also know that half of the e-commerce merchants in the space, , especially when it comes to the Shopify ecosystem. , they know they need to shift their focus, but they don't really know how to, especially in terms of bridging the gaps between purchases, right?
, so we know that it's kind of this puzzle that a lot of brands have yet to solve for. They either have all of the pieces and don't know how to put that puzzle together, or they're missing pieces. Hate when that happens. , so we really need to, . As yacht ppo, help brands figure out, okay, what are the ways that we need to, , drive repeat purchases and not only acquire new customers, but new relationships.
Just even taking a step back and probably giving you more information you need for that question is why do brands have an issue with retention? Why is it so difficult to kind of accomplish? . as Yapo adds more products into our suite, , we needed to first understand what was the actual challenge, what are the different elements that make up, brands needing to shift from this acquisition at any cost [00:03:00] model to, okay, how are we gonna double down on all of these customers that we've acquired, especially kind of coming out of this covid craze, , to, really make sure that our products were going to solve for those issues.
Some of those reasons were brands had overly complex tech stacks. The accountants had a toggle between different solutions. They didn't really have that cohesive post-purchase experience for customers. We also found that a lot of solutions kind of led to disconnected data, right? So when there's a lack of visibility, you kind of.
Have products in different silos. There's blind spots, and it leads to a bad customer experience. Thirdly, brands have an issue sometimes properly tracking retention. What are those metrics that you really need to analyze to understand that customer lifetime value? . And fourthly, just incomplete performance data as a whole.
I call it like strategy paralysis. You have all of this large data, but you can't make it smart data. those are the different issues that we've, we've tried to start to solve for. And I've probably given you more information than you needed for your question. [00:04:00] So , before I dive into that, I'll, I'll let you.
Claus Lauter: Okay, let me unpack the word which you just mentioned. Smart data. So basically sort of a paralyzes , and people are just overwhelmed by , the pure amount of data they have and cannot really find out the gold nuggets in the data. How do you approach at your yacht pool , and you're around for yacht posts around for a long time , in the Shopify world.
How do you work with.
Danielle Butera: It's a good question. The fact that we have this holistic approach to retention, , allowing us to have this unified data layer across all of our products. So across reviews, loyalty, FSMs, subscription referrals.
You can have all of that data in one place, which is the first step to making sure we have the full picture of that customer journey. So when we have all of this data in one place and we have this consolidated tech stack that allows us to use our segmentation engine, To really personalize engagements that every step in that buying journey.
And once we have all of that information in one place, it makes it a lot easier for a brand to then understand customer [00:05:00] lifetime value, which I think is still quite a big umbrella topic. So there's different metrics that we think of that all bubble back up into. Sale tv. I think some of those off the top of my head are like, repeat purchase rate or churn rate.
Time to next purchase frequency. Average order value is a huge one. One of the biggest. Pain points or challenges that our loyalty product help solve for is that average order volume. How can we take users for customers that have purchased maybe just one time , or continue to just maybe spend X amount?
How do we get them to come back and spend more? Our loyalty solution help solve for that? And also customer sentiment data. It's great to have people coming in and purchasing. And it's great to get reviews, the sentiment of those reviews. Taking that, feedback from customers is huge and or helps brands, I should say, really understand the full experience shoppers are having with their brand and strengthening again, that relationship. So I think those different metrics and it's best to analyze them when we have, , all of that data in one place.
And overall just looking at channel growth and [00:06:00] engagement. , how are the different marketing channels even outside of what Yapo might be helping with performing. Where can we make, room for improvement and, use Yapo data to personalize those different channels as
Claus Lauter: Retention starts with acquisition in my understanding. So with YoPo, and a lot of people might know YoPo as a, , review app that was in the beginning, but you're much more than this nowadays. you follow the whole, , customer journey through a purchase. Give me a bit of an overview where it starts with building up the retention through acquisition and then the different apps or the different features that you offer for merchant.
Danielle Butera: kind of all starts with reviews and our visual U G C product. So think gathering either social content or images and videos from reviews. To help brands, customers really see how the product looks and feels on different users. Those products really enable brands to retain customers by making sure that we're ensuring a valuable first purchase.
We wanna make sure that we can use all of this data to influence the products the customers going to buy. They understand, maybe what size they need, what [00:07:00] product is gonna help with their hair or skin concern, and kind of the health and beauty space. . So really helping drive that valuable first purchase because when we have that first purchase that's going to be built and we know it's going to be something that the user's going to be interested in, it helps drive the rest of that user journey.
You come to the site, you make a purchase then get a SMS request to leave a review about the product. We're then, getting that user post-purchase engaged with the SMS marketing channel. They can leave review content. Once we have that review content and then we have their information to communicate with them on sms, , we can then follow up to remind them about like a loyalty program.
Hey, we saw that you loved your purchase, you gave it five stars. Remember that you can now. Either sign up or use this purchase as, points that you've gathered to come back and make an next this also helps keep customers not only shopping with the brand, but shopping with the brand on their site.
A lot of times, brands are also selling on Amazon. How do you keep customers consistently engaged with your specific brand and not just going [00:08:00] back, , to Amazon for those purchases? Let's have a loyalty program to really engage with them. , foster that long-term relationship and double down on retaining those customers.
And then, you know, once we have loyal customers that are buying products from us again and again, you factor in subscriptions. I think we kind of live in a. Microwave society, if you can't get something easily and within 60 seconds customers are moving on. So being able to have somebody subscribe for a product to come, every month, every six months,
it allows a lot of stability for brands to project out, repeat purchases and kind of again brands to turn loyal customers into lifelong customers. We're building that relationship. We're making it very easy for a customer at the end of the day to keep purchases coming in from the site.
I mentioned SMS before, but I think it ties into every step here, whether it's reminding a user of how many loyalty points they. , whether it's getting that one time purchaser to buy again maybe it's getting that average order value up. Or maybe it's even kind of more on like the customer service side.
We want to prevent churn. So [00:09:00] if we can use a lot of our different features and predictive analytics to say, Hey, this segment of customers is likely , to turn soon, let's send them a message at the right moment. To make sure that we can either, remind them of loyalty points they have, , give them a discount off their next purchase on a product we know that they've enjoyed in the past.
Really tailoring those messages to make sense at the right moment in that buying journey are what's going to kind of keep those customers in a cyclical motion. And that starts with reviews , and works its way through our different product line at every stage in that buying journey.
Claus Lauter: one of my all-time favorite apps has been acquired a while ago by YoPo. It's SMS bump. SMS bump has made me , a ton of money on my own store, and I think SMS is one of the, , most affordable ways to get people back to your store. Tell me a little bit more about how SMS marketing actually works in regards to re.
Danielle Butera: nice to hear that SMS comp has been successful for you in the past too. But we know from research we've done that, 80% of consumers. Are going to be more loyal to a brand that delivers tailored experiences.
SMS is really central to retention marketing because we know it's going to drive effective communication when done correctly. we allow brands to engage with two-way communication. Whether it's responding with keyword prompts or just being able to text immediately back to a brand with our platform.
I think of this [00:11:00] within two buckets as well, whether it's transactional messaging. , making sure that we're sending shipping updates, delivery updates, but more so on that marketing side how are we tying communication to our customers at that right moment in the buying journey. whether it's, Shopify data that we're taking in, different data that we're taking from our integrations with Clavio from gorgeous.
Zendesk to make sure that we're having the best experience for a user on sms. I talk a lot about our product synergies because it's really what empowers great results on our SMS product. We see about an 81 x roi. From brands that are using loyalty data within their flows sounds about , a little over a hundred x ROI when customers are including loyalty data in their campaigns.
We also see about a 66% increase in conversion rate when we send review requests on SMS versus email. . So we know customers that are, brands that are using sms see much higher engagement rate just because the whole marketing channel as a whole, everyone has their phone in their pocket.
I don't really check my email that much anymore. Not to [00:12:00] say email marketing is not an effective marketing channel, but everyone's tapped in. This is in their pocket at all times. I have my phone in my hand for listeners. It's really important to. Communicate with customers at that right point.
And when we can leverage all of this personalized data it gives what's automated, quote unquote, a very personalized approach. our SMS platform really thinks about the marketing channel as one-to-one. We want every message that a customer receives to feel like it was personalized for them and not kind of rely on that batch and blast send mentality.
Our customers overall are seeing extremely high ROI because of those different product synergies and integrations.
Claus Lauter: Okay. Let's talk about integration and how to get your platform into a store. How does that work?
Danielle Butera: Sure. So we actually shameless plug number one Fs m s app in the Shopify store. Very easy to get started.
It takes about all of, I'll even be a little conservative here, 10 minutes to download the app integrate with Shopify, make sure we have the proper compliance in place. Collecting subscribers at checkout. So it really takes about 10 minutes just to integrate on the [00:13:00] SMS side. And then you can really just, , start collecting subscribers.
And once you're ready we can set up the right flows. You would work with a CSM on the yacht, PPO side to implement the right strategy, understanding, how and where I should say, are we going to collect subscribers? , what different flows do we want to have live? Whether it's, a welcome flow versus abandoned cart back in stock is huge, especially thinking of a lot of the shipping delays going on in our world today.
And then having the right campaigns tailored to the right segment of audiences as well. It's also just taking the integration conversation a step further. Something we're working on here, across all of our product. I think about our deepened integration with Clavio we're making a lot easier to integrate with these other products in a customer's tech stack, , with one click.
So not having to integrate reviews, then loyalty than SMS with the same tool. Let's do it in one click, get everything integrated, get that data synced so we can get to , the good stuff of a marketing strategy.
Claus Lauter: Okay, you just answered the question that I had is how does it work with data going from one app to the next one?
So that should be [00:14:00] automatic at some point. When it comes to pricing, there's different levels of pricing that you have. Just gimme a rough overview of what, uh, merchant can calculate with.
Danielle Butera: I'm gonna give you , a politician answer here. It totally varies for our products.
I will say there's definitely like dressing an elephant in the room probably for some listeners. We've gotten, a lot of. Maybe bad press in the past about our products being super expensive. Something that we've launched this year is more affordable, what we call prime and gold plans for our reviews and loyalty products.
Making a lot easier for maybe newer Shopify e-commerce brands , to use our products at a lower cost point. Giving them options to pay monthly. Extremely cost effective to kind of get started. And then once they really scale up getting them into , our more annual plans. Also our SMS tool.
We've made extremely price competitive making sure that in terms of usage rates we are making sure our customers aren't worried about carrier fees. that's a huge thing. , last July carriers increased their costs.
So we had other SMS platforms in the [00:15:00] space seeing almost like 115% increase in usage rate because of those carrier fee hikes. , we actually absorb that cost for our customers. , so you never have to worry about kind of putting an SMS media budget in place and then having to re-budget once carriers increase costs.
So that's something in terms of just pricing that , we work on or proud of. A lot of that has to do with SMS bumps, longstanding relationship with a lot of carriers making sure that those usage rates can be as affordable as possible. And then on the subscriptions front one of our newest product.
We're making this extremely easy, you know, zero platform fee to get started with our subscriptions. as of right now about a 1% charge for your total subscription value over $500. So making it very, very simple for brands to kind of test out these newer products of ours. See how they work, see how they're driving and will drive ROI and repeat purchases at a very , lower, no barrier to entry.
Claus Lauter: Okay. Now I know you work with a lot of big brands like Allbirds, Truby, Steve Madden, and really well-known names in the space. What are they [00:16:00] busy with? Do we have a gold nugget there? What's their focus right now? Cause a lot of things are going on. , people are talking about recession and inflation, and I think the big brands, , because they have so much data, they know where they focus on.
Is there anything that you can see where they're specifically focusing on, which might help Also smaller margin. .
Danielle Butera: Not to drive back to retention, a lot of it has to do with making sure that we're retaining customers with ease. We're keeping all of this data in one place.
A lot of these larger brands that are using multiple products and have this, consolidated view of data. , if they can take data, make it digestible and make informed decisions based off of that it's going to be easiest for them to succeed. So because of our different products, a lot of the feedback that we're getting is, okay, the feedback we're getting from brands is making sure that customers are staying engaged even if they have shipping delays.
A lot of customers in terms of our customers, so brands are making sure that marketing budget is maybe shifted away from your Googles, your metas, [00:17:00] your tos, because they're seeing that a hundred percent increase in customer acquisition costs. So how can we double down more so on the customers?
Gained over the last few years and focus on channels like smf, like subscriptions because it's going to cost a lot less to execute, and we're going to see amazing results from that. So I think making that shift to how can we retain customers and talk to them again at the right moment in that buying journey.
So like if we know from all of the data we've collected that we're able to say, Hey, Segment of users are likely to churn in the next 90 days. So a lot of our platforms focused on predictive analytics. Who's likely to churn, and getting in front of them before they've made up their mind, , that churn risk is going to be huge.
Making sure that we are using, that data at the right point in that buying journey is going to be something that even smaller brands can then adapt and make sure that they're really doubling down on maybe them analyzing Here comes back to me now.[00:18:00]
they're using reviews. What are customers saying? What do they want to see more of? What's the feedback that they're getting? From review sentiment so they can really improve their products and make sure that they're doubling down on the customers that they do have and having them come back, build that relationship and have it all based off of the feedback that , they're gathering across this different community engagement.
Claus Lauter: makes total sense. I think right now in an economic time, it's really important , to focus on the most affordable way and that's your customer, your data that you already have. So whoever did a good job in the past, I think they are better off right now. If you start in new business, there's two ways to grow your business, but I think we need to be more careful when it comes to your ad spend there, Danielle, where can people find out more about.
Danielle Butera: So yapo.com great place to start. Also, I'd be remiss if I didn't point out our partners program. So if there's any agency people out there listening today, yapo.com/partners, we have an amazing partner program. And to learn more, I think about our retention marketing platform approach, [00:19:00] yapo.com/platform has a lot of different data points on the topics we discussed today.
Claus Lauter: Excellent. I will put the links in the show notes, then you just one click away. Danielle, thanks so much for giving us an overview what's happening in the world of retention. I would highly recommend all listeners to check your website out. And again, , just pointing out s m s Bump is still one of my favorite apps.
Thanks so much for your time and have a great day. Thank you. You too.
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