eCom Unity #2 - Retention mindset & why your retention might be stuck

Deep-Dive | The right mindset to approach retention

If you are, like many others, struggling to increase the lifetime value of your customers, I want to broaden your horizon.

Most eCom brands exclusively focus on cost-effective marketing channels like email marketing to win back their customers.

But this is wrong. Or at least incomplete.

And I’ll prove it to you.

Let's look at the following example.

You have a CAC of $40 with a Contribution Margin 2 of $45 in the first order (aka First Order CLV).

Over the next 2 years, your CLV increases to $130 giving you a CLV/CAC of 3.25.

First order break even plus solid CLV/CAC ratio. Nice 🙏

But now let's assume that only 30% of your customers come back and place a second order.

Since 70% of your customers only have that $45 CLV from their first order, that means that the remaining 30% must have an average CLV of $328 to get to an average of $130.

Now look at this massive gap.

$45 vs $328

That's a $283 (or 630%) increase in CLV you get by getting your customers to make a second purchase.

And that's what I am trying to get at here.

The absolute difference in the contribution margin you generate is massive.

Once you are aware of that, it really starts to broaden your horizon as to what retention tactics you can implement.

You do not exclusively have to rely on cheap channels like email but can also leverage more cost intensive measures.

Because even if you spend $30 to generate an incremental repurchase, the ROI is still going to be 10x.

But the important thing here: it’s incremental.

What exactly that means and how you can easily measure that I will share in the next newsletter.

There’s also this video where I explain the economics of retention and its impact on your margins, liquidity, and long-term profit:

Deep Dive | 13 reasons why brands struggle with retention

Why is it even the case, that so many brands are struggling to pull that lever and push their retention & CLVs to a higher level?

Here are 13 reasons why:

1. You think you should only be using cheap distribution channels like email marketing to drive retention.

2. You don’t really understand who your customers is and why they are buying your product.

3. You don’t optimize your marketing messaging to only attract high quality customers.

4. You focus on promoting products that can drive the lowest acquisition costs and don’t consider their lifetime value.

5. You don’t measure the incremental impact of new retention approaches (even though it’s pretty easy).

6. You don’t prioritze customer activation which means ensuring that your customers use your product frequently and in the right way.

7. You don’t proactively mitigate churn by introducing new use cases, reminding people why they started using you or are exposing them to new products (for free).

8. You don’t prioritize brand. In a world of undifferentiated products, brand is key to drive retention.

9. You don’t improve your product. No customer will ever buy a product again that didn’t deliver the benefits they were hoping for.

10. You set the wrong expectation when people are buying your product.

11. Your Head of Retention purely has a Email Marketing background and that defines how they approach this topic. Retention is so much more.

12. You don’t make your customer surveys actionable by tagging people based on their answers.

13. You don’t shift marketing budget to channels that generate high CLV customers.

So if your CLV is stuck at the same certain level for quite a while, these are probably some topics you should look closely at to change that.

Brand Breakdown | MissPompadour

MissPompadour is giving a masterclass on how to sell a generic product online.

At Klar, we've started working with them, and their numbers impressed me. After digging deeper, I found their success boils down to something every brand 𝘤𝘭𝘢𝘪𝘮𝘴 to do, but almost no one actually does:

Customer Focus.

1️⃣ Guiding the customer: They don’t just sell paint, they sell transformations. MissPompadour’s site helps customers envision their next DIY project—whether it’s floors, cabinets, or furniture—guiding them through the process and making the paint choice secondary.

2️⃣ Offering consultations: They offer 1:1 consultations via phone, email, or WhatsApp. Customers get personalized advice on colors, techniques, and product details, making even technical decisions easier and more confident.

3️⃣ Building relationships: Their loyalty program and app go beyond just sales. Customers earn points for sharing before/after photos, get exclusive consultations, and more, all designed to build long-term relationships.

The result? A fast-growing 8-figure brand with loyal customers—all built around customer focus.

Upcoming Events | eCom Unity goes UK & JTL Connect

eCom Unity Cooking Classes

🇬🇧 For all London-based eCommerce leaders: we’re hosting a cooking class where you will collaborate with professional chefs and at the same time gain insights from other eCommerce experts on their growth strategies.

Tue, October 8, 7pm. Apply here: https://www.getklar.com/ecomunity-events/spice-up-your-ecom-game-ecommerce-leaders-cooking-class

🇩🇪 Same thing, but in Hamburg: exclusive cooking class for eCommerce leaders to exchange, cook together, of course, and listening to TEVEO sharing insights in their growth formula.

Thu, October 24, 7pm. Apply here: https://www.getklar.com/ecomunity-events/the-secret-sauce-ecommerce-leaders-cooking-class

JTL-Connect tomorrow @ Cologne

Looking forward to speaking on the Main Stage at the JTL Connect tomorrow (Friday, 27 September) in Cologne.

I'll be sharing all the best practices of how the fastest growing eCom brands use their data to profitably scale their business.

Happy to meet some familiar faces of you there!

Thank you for reading :)

I am on a mission to help eCom brands build better, more profitable businesses.

I have built one 8-figure and one 9-figure eCom brand in the past and with Klar I work with over 700 eCom brands today.

If you have a specific questions you would like me to cover next, just reply to this email.

Have a great week.

Max ✌️

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