Acquiring new customers is great. But for a DTC brand to be successful in the long run, customer retention is equally important. Paid acquisition online is no longer cheap and losing money on the first order is becoming the norm now.
In such a scenario, profitability relies on existing customers where repeat orders equalize acquisition costs. Once you’ve paid to acquire customers, make the most out of it.
As per a DTC metrics report, DTC brands enjoy a retention rate of 28%. Even more interesting is that 60% of the revenue comes from return customers. In short, DTC brands thrive on a loyal customer base.
What is the customer retention rate? Definition
Plainly put, the customer retention rate is the ability of a business to retain its customers over time. A higher customer retention rate signifies that the business has managed to build a sustainable customer relationship. At its core, DTC customer retention is about keeping your customers engaged with positive experiences and turning one-time buyers into loyal long-term customers.
How to calculate customer retention rate?
dtc-retention-strategy-crr-formula 
The customer retention rate formula is a percentage and can vary depending on your industry and sales lifecycle. For ecommerce brands, a 35% retention rateis considered good.
So without further ado, here are 12 strategies to increase the retention rate for your DTC brand.
1) Analyze data to find out why customers are dropping off
When you see a drop in customers buying from you, figure out where in the customer journey users tend to drop off and if you can solve any issues. Google Analytics can help you find out where users are clicking, the pages they are visiting, and where you are losing them.
Keep a track of important metrics that indicate issues in the customer journey, including:
- Customer lifetime value
- Customer retention rate vs churn rate
- Refund and return date
- Repeat customer rate
- Subscription rate
For example, if you have a high return rate, check if there is an issue with the product itself or if the product does not match the description.
Or send surveys to customers who haven’t purchased from you for a while. Here’s how Fabletics uses a quick and simple survey to ask customers why they haven’t returned to the brand.
dtc-retention-strategy-fabletics-survey 
2) 20% of your customers will drive 80% of the revenue = Find the right customers
By knowing your most valuable customers, you can implement behavioral upsell strategies to improve the customer retention rate and the customer lifetime value.
So how do you find out the top 20% of your customers who’re driving the maximum value?
Use the RFM (recency, frequency, and monetary) approach to know where 80% of your business revenue comes from.
Here, recency answers when the customer purchased from you – customers who purchased recently are more likely to convert to loyal customers.
Frequency means how often a customer purchases. The more frequent the buyer, the higher the chances of them being loyal to your brand.
Monetary implies how much a customer spends on each purchase. High spenders are more likely to stick around your DTC brand.
Merge this data to determine your valuable customers and target your customer lifetime value campaigns towards them.
3) Utilize retargeting to bring back customers
A great customer retention strategy for your DTC brand is using retargeting. Studies have shown that retargeting can increase conversion rates by upto150%!
Research shows that retargeting ads outperform all other formats of targeted ads and are 76% more likely to be clicked on rather than a regular ad.
Here’s how you can get the best out of retargeting ads:
- Test different ad variations to know which CTA works the best, what copy your customers click on, and how to use it in further campaigns.
For example, Warby Parker retargets visitors who’ve browsed through the seasonal collection by showing the spring collection:
dtc-retention-strategy-warby-parker-seasonal-collection 
On the other hand, this retargeting ad offers a free trial and is shown to visitors who explored the try-on page on their website:
dtc-retention-strategy-warby-parker-try-before-buy-campaign 
- Make sure your products resonate with your customers because if they’re not interested in the products, your ads will lose value. Know the products your customers shop for and use similar products to win them back.
- Consider shuffling your ads every month to keep them fresh and your audience interested.
4) Create subscription plans for products that need reorders
What if your customers did not have to come back to your DTC website to reorder? That’s where subscription plans come in. They are recurring orders to secure brand loyalty and increase your bottom line.
What’s even better, it not only commits a customer for future purchases but also improves your customer lifetime value – necessary for the survival of your DTC brand.
Here’s how Birchbox has multiple subscription plans that a customer can choose from:
dtc-retention-strategy-birchbox-multiple-subscription-plans 
As a part of your customer retention strategy, test if offering discounts can bring inactive customers back into the buying game. If they don’t respond, it is best to let them go.
5) Set up a strong loyalty program
A common question for ecommerce stores and DTC brands is “How do we prevent customers from switching brands?’
When you reward customers for purchasing from your brand, it creates a reciprocal relationship that has high value for both the brand and the customer.
Instead of a plain loyalty program, try out different variations like:
Tier-based loyalty program– Sephora’s loyalty program (Beauty Insider) uses a tier-based system in their loyalty program with exclusive rewards that are not accessible at lower levels:
dtc-retention-strategy-beauty-insider-tier-based-loyalty-program 
VIP program– If you’re deciding how to work out your customer retention rate, another strategy worth trying for your DTC brand is having a VIP program that offers great perks and gives a sense of community.
dtc-retention-strategy-the-north-face-xplr-pass 
The North Face’s XPLR pass appeals to its customer base with unique extra offerings like gear testing, discounts, and access to unreleased gear along with points for specific sustainable actions.
The reason why North Face’s VIP program stands out is that it knows the customer’s specific wants and needs.
Be generous with free samples– Free samples have proven to increase sales by as much as 2,000% . The best part, free samples help build brand loyalty and often lead to the second round of purchases. You can combine free samples with your loyalty program as a part of your DTC customer retention strategy.
Here’s how Bobby Brown added a free sample on the purchase of its lipstick at checkout:
dtc-retention-strategy-bobby-brown-free-sample 
6) Optimize your DTC website for user experience and CRO
High-performing DTC product pages that bring potential customers and sales have one thing in common – they provide a positive user experience on their website.
Looking to create a seamless and easy experience for your visitors to encourage them to buy on your website? Some tips worth following:
- Simple navigation– Your customers expect logical website navigation to find what they need with the least number of clicks. Have an explicit “View All” option allowing users to see all available items on your website.
For inspiration, refer to The Lip Bar’s DTC website:
dtc-retention-strategy-the-lip-bar-navigation 
- Seamless search– Give users the ability to search within a category, on your DTC website, to improve conversions. Your mobile users are dealing with smaller screens and would prefer to get a different search experience.
dtc-retention-strategy-seamless-search 
- Pay attention to checkout If you’re looking to improve your DTC website conversion rate, allow for guest checkout, autofill forms (address, email, and contact details stored on the mobile device, browser, or app), include a variety of payment methods, use progress indicators during the checkout, and optimize the checkout for speed.
7) Have an omnichannel DTC strategy
Ideally, your DTC brand should be where your customers are and use all channels as per the customers’ preferences and past behavior. To improve your DTC customer retention rate, open up multiple communication channels like:
- Segment buyers and target them with email marketing– Segment buyers as per their persona and use email marketing to target them. For more loyal buyers, you can promote flash sales and discounts, pre-book their purchases or give them a sneak peek into new products.
This email from Birchbox is a great example of keeping customers connected to your brand:
dtc-retention-strategy-birchbox-personalized-email 
- Run ads on Facebook– Facebook has one of the most targeted contextual advertising remarketing features. A well-optimized Facebook Ads strategy for DTC uses multiple Facebook ad types to target every touchpoint on a shopper’s journey. Along with testing different ad types for different objectives (for example lookalike targeting to reach new buyers and retargeting ads to convert), you should test different ad elements in each campaign.
- Use Facebook Messenger to communicate with users– Be it discounts, providing order details, and asking for a post-purchase experience, Messenger can automate and personalize conversations with existing and potential customers. Fitness apparel brand Doyoueven sends browse abandonment and cart abandonment messages to shoppers who have visited their site, looked at the products, added them to the cart but never completed the purchase.
As per a case study, they generated $155,000 in 30 days with Messenger automation!
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- Use WhatsApp to stay in touch– With WhatsApp’s 2 billion users worldwide, DTC brands are tapping into this app to reach existing customers, drive loyalty, sales, and improve customer retention rate.
If your users have opted-in to receive updates through WhatsApp, you can send them reorder messages (especially when you have a subscription model), price drops, sales alerts, product recommendations, and coupon codes.
dtc-retention-strategy-shoppop-whatsapp-templates 
Shoppop has some great WhatsApp templates for reference.
In addition, WhatsApp chatbots for DTC brands have numerous use cases. With WhatsApp’s business API, the conversations are automated and are used to answer customer queries 24/7.Hidesign, a brand selling leather accessories uses WhatsApp to answer frequently asked questions:
dtc-retention-strategy-hidesign-whatsapp-bot 
Traditionally, order status updates have been sent through email and SMS, and they tend to go unseen. LensKart uses WhatsApp chatbot to keep customers updated about their package status.
Customers can also reply, ask for rescheduling, or change the delivery address right from WhatsApp:
dtc-retention-strategy-lenskart-whatsapp-chatbot 
8) Promote customers as brand ambassadors and incentivize user-generated content
There’s nothing better than existing customers promoting your brand for DTC retention marketing as this validation comes from real people instead of the brand.
Be it on social media or on your website, encourage customers to create content with your products and incentivize them in different ways for sharing it on their social media. This could include sharing on your company page, offering discounts, freebies on the next purchase, and so on.
Your DTC brand can make the most of UGC in several ways:
1) Promote customers as brand ambassadors
The clothing brand Camping with Dogs’ Instagram page is filled with photos of their customers and their dogs on camping trips.
You can mention a specific hashtag in your bio and ask customers to share their experiences using the hashtag.
dtc-retention-strategy-camping-with-dogs-customer-stories 
2) Encourage unboxing experiences
– Unboxing videos are extremely popular among online shoppers.
Apart from seeing the product in action, it captures the custome’s excitement and satisfaction with the purchase.
Man Crate is a brand that capitalizes on unboxing videos for social proof:
dtc-retention-strategy-man-crate-unboxing-videos 
9) Use product bundling
Product bundling helps DTC stores increase their average order value and improve customer retention rate. You could group several products and sell them as a combined package, often for a cheaper price than what they cost individually.
Additionally, it is an effective way to offload lower-selling or less popular products by bundling them with bestsellers.
Skincare brand Murad repeatedly references how the price of its Hydrate Trial kit bundle is lesser than the combined price of individual products. The buyer feels that they’re getting a good discount here in addition to being nudged to enroll in the subscription plan:
dtc-retention-strategy-murad-price-discount-showcase 
10) Use content marketing across different stages of the buyer journe
While content marketing as a customer retention strategy is well-known and commonly used, you can leverage different formats of content for buyers at different stages in their journey.
For example, Northern Brewer is an ecommerce brand selling home-brewing kits, equipment, recipe kits, and ingredients. Home brewers can benefit from expert advice and that’s what Northern Brewer addresses using content marketing.
The website has a whole section dedicated to customer education:
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Within the articles, they seamlessly weave their products, which helps buyers find what they need while improving sales.
dtc-retention-strategy-northern-brewer-embedding-products 
Plus, they have a massive video library where buyers can get stepwise instructions from experts:
dtc-retention-strategy-northern-brewer-product-instructions 
They offer free interactive tools like a refractometer calculator to make the brewing process easier:
dtc-retention-strategy-northern-brewer-refractometer-calculator 
Northern Brewer shows that customer education can improve your DTC business’s customer retention rate. Find areas where you can share your knowledge to educate buyers.
11) Send personalized retention emails
Offer customers a personalized experience by going beyond including a customer’s name in the email. Ecommerce brands are coming up with innovative email customer retention strategies:
1) Birthday emails
– Sephora uses birthday emails to give customers a freebie that they can avail of by purchasing in-store or online:
dtc-retention-strategy-sephora-birthday-email-campaign 
2) Post-purchase emails
– Thank you and confirmation emails have an open rate of65%, so customize them with a feedback survey, ask for testimonials, or recommend similar products.
See howBellroysends a post-purchase NPS survey email 30 days after the purchase:
dtc-retention-strategy-bellroy-post-purchase-nps-survey 
3) Repeat purchase reminders
– Suppose you sell protein supplements that need to be replenished every 12 weeks, send automated reminders 10 weeks after each purchase as repeat purchase email campaigns have an open rate of 53.6%.
dtc-retention-strategy-rockin-wellness-repeat-purchase-reminder 
4) Winback emails
– This email from Tattly adds a touch of humor and Halloween spirit to spell out the situation and what to do next. It encourages customers to click that red button.
dtc-retention-strategy-tattly-winback-email 
5) Re-engage customers with product updates
– Although winning back customers is an effective customer retention strategy for small brands, it is not easy. Most of your customers are being sent out winback emails by several companies, meaning they are used to the old trick by now.
How do you stand apart?
Prove to customers that you’ve improved your product or service since the last time they purchased. Show that you’ve listened to customer feedback and done something about it and that’s where product emails come to help.
In this example by Outdoor Voices, the company explains how they’ve added new products that customers asked for:
dtc-retention-strategy-outdoor-voices-new-products-promo 
Another customer retention example for DTC brands worth trying is sending product updates when you’ve launched a new line or offering – to dormant or lapsed shoppers. If the customer has purchased from you earlier and likes your products, they’ll be likely to come back and purchase from the new category.
12) Communicate clear return and shipping policies
Product return and shipping policies can have a significant impact on customer satisfaction. 55% of shoppers would not choose to shop with DTC brands who don’t have flexible return policies. What’s more, 49% said they check a store’s return policy before buying from a brand.
When writing a return policy, be sure to mention the following:
- What items can be exchanged?
- What products are non-returnable or non-exchangeable (final sale)?
- When things can be returned or exchanged post-purchase (30, 60, or 90 days)?
- In what condition can items be returned (lightly worn or with tags still on, and more)?
- How to initiate a return or exchange (an email address or a web page to visit)?
At the bottom of every product page, Chubbies has its returns policy briefly mentioned:
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In addition, they have a separate page and form for customers looking to initiate a return. There’s a separate support email in case customers have difficulty filling out the form.
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Include links to your return and shipping policies at several “hard-to-miss” places on the website like the footer, FAQs page, product page, cart, and checkout. This will help set the right expectations before a purchase is made.
The most effective customer retention strategy = Providing a positive customer experience consistently
By now, you know how strong DTC customer retention strategies create loyal repeat customers with an excellent ROI. Remember, at the end of the day, your brand isn’t about you, it’s about your customers. Strengthen your relationship with them and see how they stick to you.
