A DEEP Dive On How Retention Works For Ecommerce Businesses transcript

I was wrong about retention. I had a misunderstanding for a long time about how retention works in e-commerce businesses and it was around some things that a lot of people have talked about for a long time that I thought were just totally wrong and totally misguided. And the main thing that I've been wrong about about retention in the past that I want to illustrate today, I would say I boils down to the reality that basically every approach to retention and to spending ad dollars on high value customers actually involves way more trade-offs than most people recognize.

And I want to illustrate that for you today and I want to do that in part by referencing things, two comments that I've heard people make in the past that I think I probably kind of shrugged off but that I should not have done and that more time looking at more data sets has really made me reconsider. The first of those comments was from Taylor Holiday a long time ago where Taylor basically said brands who are high LTV brands do not take enough stock of their ROAS on first purchase.

They spend into oblivion to get customers and they spend all this money and the logic is they get customers that have a really high retention rate but it cost an enormous amount of money to acquire and the brands all think that's the right way to do it. And what Taylor says is when you look at the actual charts, that actually isn't the way to drive the most contribution margin in your business that even for super high LTV brands that that more contribution margin comes via driving your CAC down than most people realize is part of the challenge.

And so that's the first point that CAC really really really matters a lot. And over and over, if you take nothing else from this episode of this podcast, I want you to hear that many many brands have a very strong incentive to spend less money and take more upfront contribution margin for a bunch of reasons. Now, not for forever. I'm not saying they shouldn't grow. I mostly think that they probably should grow a little slower or a little more deliberately more than they shouldn't grow.

And many brands are trying to grow too fast. There are exceptions to this rule. I'm talking about a generalized principle. I want to be really, really clear about that. But then many, many brands ought to consider that more. They really ought to know that that case. And when you think at the P&L level about this, this makes all the sense in the world. If CAC is your largest or second largest line item in your books, and for many e-commerce businesses, ad spend is the actual largest line item in your books, specifically your Meta spend.

If that's the case, then reducing that opens up margin. Right? It just sort of very simply. Reducing that opens up margin. Now, you can't do that forever, and there are brands again that ought to go chase a bunch of growth and a bunch of scale really fast. I think back to an interview I did a long time ago with Will Nitze from IQBar. And actually it's really an interview I heard from Will where he where he said, "In food and beverage, the only thing that matters is scale." So, all we did was he raised a bunch of money, raised multiple rounds, and did that because the thing he really cared most about was getting scale because you can't make the margin work in a food and bev business unless you have massive amounts of scale where the manufacturing costs come down a lot, and you get a bunch more gross margin, and you can't do that without a whole bunch of scale.

So, you just have to reach scale. That's the key to make the business work. Okay, great. That's a really good exception to the rule that I'm making. But you should be thinking in those terms if you're if you're thinking about this at all. There are some other cases like that where enterprise value could be driven in an outsized way by total volume, and that therefore you got to do that. But for most of us who are bootstrap founders, there probably is a strong case to be made that you should think the ROAS you're getting on first purchase and think about where that trade-off really is.

Now, yeah, again, I'm tempted to caveat that even further because there's a lot of ways in which you can misinterpret what I'm saying. I just want you to consider that one thing. There's that. Secondly, though, let me actually caveat one more time. The other exception to this is that the marketplace of Meta is so dynamic that it's possible that you lose too much volume to make the business work, and you actually have to figure out a way to exist at a higher volume.

Otherwise, you just lose too much volume, at least if you're going to be on Meta. So, there's that. a Because basically, there's a there's a a non-linear trade-off between scale and and CAC. And so, you can get your CAC down lower, but you might lose way more scale. So, you might get 10% better CAC, but 40% fewer volume or so 40% less volume or something. And that that trade might actually not be worth making. Okay? That actually illustrates the trade-off thing.

And let me let me before I go further on that, let me tell you the second consideration that sort of got me thinking a long time ago. I noticed it. I kind of put it in my back pocket mentally, but didn't really pursue it further. And that was from Drew Fallon from Irish Financial. Drew said, "So many high LTV brands are paying a huge amount of money for subscribers. And the problem is none of them actually know what their subscription CAC is." And what he meant by that, I think, is that for most subscription brands, there is an option to both buy one time or to buy on subscription.

And there's usually a discount for buying on subscription, okay? And the reason, of course, that customers that brands discount for subscription is that the subscription customers, across every data set I've ever seen, come back at a much higher rate than non-subscription customers. And that's absolutely true. I've never seen a data set show otherwise. Subscribers rebuy more often, okay? But, let's talk about trade-offs.

And this is the first one of these I want to mention. The problem is Drew is right. If you have a page, and let's say you have a $100 CAC on an offer page, okay? And you have the option of buying one time or buying on subscription. Those are your two options. Okay? You have a $100 blended CAC. And let's say 50% of your customers take your subscription offer, 50% of them take your one-time purchase offer, okay? Then, you think, okay, I'm getting these customers.

I'm paying a $100 CAC. It's 50/50 split. That means I'm paying $100 for each customer, okay? It's the same amount for each customer. But, you probably aren't. And it's very hard to visualize this because it's actually very likely the case in most businesses that subscription customers cost dramatically more than non-subscription customers. So, what might actually What is more likely to be happening in businesses is that they have some kind of split between one-time purchasers and subscription purchasers, and the actual money you're paying for each of those is really different.

So, you might be paying, you know, $50 for your one-time purchases and $150 for your subscribers, and it looks like $100 in the end cuz it averages out to the middle, but actually you're paying $100 more. Now, that's an extreme example, it's probably not that much. I just made those numbers up to make the math easy, but you see the point. And there's actually no way to disentangle that on the page. You can't see how you're doing this apart from some split testing.

Restart removing options and things like that. And so, what I want to do, actually, is help you think through those kinds of trade-offs as you run your business and think about strategically the way to understand your business. And I want you to think about this relative to a conversation I had with Sherina Bear a few weeks back. Just go look for that podcast episode. In fact, I'll get it in the show notes. Sherina and I talked about offers.

And Sherina has this great story about Bobby, an infant formula brand, and discovering that the customer in that case really wanted to try the product before they bought it, okay? For a bunch of reasons. And therefore, a sample offer was by far the offer that moved the needle the most for Bobby. So, Sherina was able to think about what does the customer actually want and how does that dictate my offer? Because the customer experience in the offers is the critical thing here, all right?

So, I want you to think about that somewhere in the background of this because as you think about your business and the unique dynamics of it, there might be trade-offs here that are pretty significant. I'll give you another little example from from Bobby thing. I've heard some people say, and I don't know if this is true, okay? That men are more likely to subscribe to products online than women. If you're selling primarily to men, it may be easier and your CAC may be lower on subscription offer.

It may be harder to get a woman to subscribe to a product. Now, again, I don't know if that's totally true. There'd be ways to test that, but it would be one of those kind of customer considerations that should be in your consideration window as you think about these kinds of things. Great brands invest [music] in their supply chain. They invest in it because they can get cheaper cogs. They invest in it because they can get faster turnaround times.

They can get better terms, better payment terms. They can negotiate shipping rates, 3PL deals. They can do all kinds of different things to make their supply chain work better or just have better product development partners, more reliability, redundancies in your supply chain so that if something goes wrong with one manufacturer, you're not caught with your pants down with another. And [music] that can all be done alongside you by my good friends at Move Supply Chain.

Move Supply Chain is a supply chain agency based in the Philippines, which is a huge advantage for your business both because it makes them affordable as team member add-ons. A lot of brands did not get into e-commerce because they really deeply understand the mechanics of supply chains and the financial realities of supply chains. Move Supply Chain does in part because they have been working in US-based e-commerce business for a long time.

This Filipino employees is where they were born out of. And then on top of that, Move also is a very short flight in the Philippines from China and from Vietnam. And it's really easy for them to get in and out of there. They can represent your brand to different manufacturers, negotiate rates, go to Canton Fair, all those kinds of things. So, you ought to be considering working with Move Supply Chain in your business.

You ought to be thinking about that because your supply chain, I can almost guarantee you, can be better, can be more efficient, can save you money, can scale up better. And you should be doing that because you're going to run into supply chain problems. It's going to happen. They can help with all of them. Go to movesupplychain.com right now. They've got a bunch of stuff they can do for you. movesupplychain.com right now.

Get on a call. See if there's an opportunity for them to work with you and help you. I have found calls with Laura and her team to be incredible. They just like hear something about your business and immediately know what to do about it. So, go check it out right now. movesupplychain.com. Okay, so, let me show you a chart. Now, I'm going to show you a bunch of data. This data is totally made up. It's completely false, okay?

It reflects some realities that I've seen in some different businesses, but it does not it's not a real business, okay? So, I just want to be clear about that right away. So, we're going to call this business, you know, Acme Products, all right? And Acme products, they sell widgets and they sell widgets on subscription. Sometimes on subscription, sometimes not. And And so this data set is is going to illustrate the tradeoffs that I mean.

And I'm going to show the screen now. If you've I've been listening to this, I'm going to try and explain uh talk about everything that I have said here and I think I can be do that in a way that will make sense. But if at this point you are somewhere where you can watch this, it might really help you cuz there's a bunch of data here to look at. So I'll just tell you that uh right now, okay? All right. So, we've got here a giant Google Sheet table. 22 months of data with 6 months of LTV relative to these customers.

You also have the number of new customers that this brand is acquiring. You got CAC, AOV, AMER, 3-month LTV, 6-month LTV, uh and then LTV to CAC on both of those and retention rates for each of these customers, the percentage of customers that come back. And the thing here that I want you to see is that the that in the section where you've got 6 months where you've got the 6 months of retention rate, okay? I have put some conditional formatting on these where darker red is bad, darker green is good.

And this conditional formatting is only vertical. This is really really key. So if you're watching this and even if you're looking at this, just know. So So each month is compared to itself, right? So in month one, for example, um uh in month one, okay? Uh of of these customer orders, oh I'm just realizing I'm going to change something really fast. All right, I've made some changes to the sheet in real time here. Thank you, Mike, for editing those things out.

Mike is the man. Uh my editor. And And And what I've done is I've I've made it so that in there's a year one and year two, uh June through May is the timeline of this, okay? So um So okay, so uh So in June, okay, uh of year one, the yellow, right? The month one customers, so customers who bought in the next month after purchasing, Okay, going to kind of throw out month zero cuz month zero is weird. If you ever look at these cohort charts, month zero refers to any customers who bought a second time in the same month they first bought.

It's usually a small number. There's a lot of noise in it, so I just don't really worry about it. So, okay. But, your month one customers, okay? Your month one customers, what you'll see is that in year one they uh their month one customer one month out from purchasing, customers rebought uh an average of 13% of customers rebought on average. And then, something changes really dramatically. Where in November through March of that same time period, okay?

The average jumps up to 19% and particularly this December cohort year goes to 20% in month one. This is a really, really good cohort. It never comes back down a little bit, April, May, back into June in year two, goes back up even more, even more dramatically, July through November, and then the next year it falls off a cliff, goes way, way back down to 12 to 15%. So, the point is there's a couple of cycles in this business where early on the retention rate is low, in the middle the retention rate is really good and gets incredible.

Okay? And then, the retention rate goes back to being really, really low. Okay? And that's what these conditional formats are doing. They're showing you by in the columns, if you look in the columns, to see where the um where the different cohorts are responding at. And and so, if you look at these kind of charts, right? Um and if if you look at these kinds of charts, what you'll notice, and I'm actually going to make this even easier on our eyes here and get rid of decimal point.

Um what you'll notice about all of these, whenever you look at charts like this, is is of course these retention rates are exactly what they sound like. They are um they're the actual rate at which customers come back, the percentage of of customers who return and buy again, okay? Um those percentage rates, what you'll see is that they typically have these similar behaviors across time. So, for example, if you look at the December of year one, December of year one cohort, that cohort uh for six months outperforms all of your other cohorts in terms of retention.

It just looks like an incredible cohort. Um Um, and and so, you know, they have a 20% retention rate in month one, and the average on the rest of them, you know, is is probably somewhere around 16% if you look at the conditional formatting. Okay, so they're they're really outperforming them. Month two, again, it's outperforming the rest. And so, if you look sort of left to right on a sheet like this, what you see is the cohorts that have the highest retention rates consistently.

If you see sort of red all the way across into white, red all the way across here, um, you know, those are the cohorts that consistently underperform the averages uh, of each month's retention rate. And then the green ones across the ones that consistently over perform it. And you can sort of see this happening across this chart, where where there's these groups. So, yeah, again, this December cohort is really, really, really good when you look at it at first, except and this is the thing I really want to get to.

If you just look at retention rate, and I think a lot of people do, you get a deception here. Because if I change the conditional formatting here, and I start to look at the actual 6-month LTV, or let's take the let's let's start with 6-month LTV. If I just do conditional formatting on that, okay? And I make it so that you get the same act. Now, that December cohort is actually one of the worst cohorts in 6-month LTV of total revenue of any of the cohorts that I have.

Now, I'm looking at this as a total revenue, so I'm looking at this this December cohort is at 133.6 uh, in in 6 months in the customers on a total, the total group of customers um, creates $133,000 in 6-month revenue, okay? But a little later on in the following year, right? You've got customers that are up to $483,000 in 6-month revenue. So, there's way more volume. And the fascinating thing about that, when you look at this chart, is that those customers also are the lowest retention customers of all of them.

So, there's actually almost a direct correlation. We can actually do this math between the uh, direct inverse correlation between the the customers that are retained or the assuming the retention rate of the customers and the actual value being created in the business. The higher put another way, the higher the retention rate, the worse the value in the business is on average. Let's actually quickly do this. If you cuz we have a spreadsheet open, if you know your way around um R squared, okay?

Uh R squared is a way to is to to conceptualize this a little bit more. Okay? Yeah, okay, so there's some negative correlation, minus .19 or minus 19%. So, not not huge, um but uh but but some negative correlation between those between those two numbers. So, um interesting, not huge, but but some. Uh okay, so in any case, it's the opposite of what you'd think. You'd think the most valuable customers would be the ones uh that have the highest retention rate, but it's not.

And there's a couple reasons for that, okay? Uh so, why is that? And this is where I think people need to get really as you're working through the retention dynamics of your business, you need to start thinking about all of these different tradeoffs. And the first and the most obvious one And by the way, we should also look at this at a different level, which is which is um 6-month LTV to CAC. Uh as long as you have months of data, you can use it in different ways.

I've got some 3-month data in there as well, so you can see it, but let's let's play the same game here. Okay? Uh if we if we do the conditional formatting, now this becomes actually even more stark, where um again, that December cohort is is really the one with sort of the super high retention is really average to, you know, sort of in the middle. And then the and then the top cohorts now are ones where it's really really bad.

So, um so for example, 6-month LTV to CAC cuz now we're considering the CAC and the margin in the business, okay? Uh so, uh both of those are factored into this LTV to CAC consideration. So, if we factor in the margin and we're giving I think we made up, let's see, uh 60 points of margin for this brand, 60 points of gross margin. And then we factor in the CAC. So, now we're talking about also about how much they're paying for these customers.

Suddenly, there's something different going on here. And the different thing that's happening is that is that actually some of our better customers are the early customers in year one who who have disproportionately low retention rates, okay? So, lots of low retention rate customers are high LTV to CAC. And then the most recent customer groups are actually really high uh retention really high LTV to CAC. The best The best uh LTV to CAC um group that we have in terms of total value being created in the business, not individual customer, but total value being created in the business is actually one of the worst uh retention rate groups that we have.

It's January of year two uh where it's $112,000 versus some of these Some of these uh where there's really super high retention are actually extremely low, like uh $16,000 uh something like that. So, I know it's a it's it's a lot to to look at and to get your head around, but the thing I want you to get to get clear about, okay, is this notion that it is not good enough to just look at the retention rate. You have to look at some other things in the business for this to make sense, okay?

So, why would this be the case? And this is where I want you to think about what's happening in your business at some other levels, okay? The first thing is you need to think about the number about um about the the CAC you're paying, okay? So, now if we go over to column C through E on this chart, you will see uh in this AMER column that there's a very strong correlation, and this comes back to Taylor's point, between the uh between the AMER and the value creation in the business, okay?

This brand, we'll say, got a little bit uh got a little bit uh uh uh CAC happy. They got a little bit ad spend happy at some point and started acquiring a bunch of customers at a 0.9 AMER. And you can see why they did it. They looked at the retention rates of these customers and they're like, "Look at this. We have these incredible retention rates." But uh when they did that, they they There's a couple of problems. The first is by month six, these retention rates are actually not dramatically outperforming uh previous retention rates.

So, even though at first the retention rates are amazing, they actually slow down. I've seen this happen in subscription businesses multiple times. You think that the subscription business that the subscription customer is way better for forever. The problem is at some point it's possible that your subscribers and your non-subscribers have revenue curves that converge on one another because at some point somebody has too many of the product that you've sold them and they're going to cancel their subscription.

Or at some point the the people who bought it and saw real effect in their lives are going to keep buying or they're going to move to subscription at some point. It may take longer if they didn't subscribe at first. It may take a may take a while for them to have three bags stored up or whatever. Heck, maybe they're just moving to Amazon in some of these cases and they're going somewhere else so you can't see it because Amazon's a way better subscription um subscription uh uh interface than than your DTC site.

But this basic idea uh is is part of the problem. So so the so the brand goes and they say we're just going to go hammer ad spend, get a bunch more customers, and we're going to do that because the retention rate is so high on these customers is way higher than our past ones. So if you do that, you end up potentially with a problem 3 6 months down the road. And that's a real problem because you don't know about those 6 months down the road today.

And this is why brands need to be thinking carefully about these sorts of things. By the way, this is true in apparel businesses, it's true in all kinds of businesses that have all kinds of dynamics besides, you know, the classic supplement businesses. Skin care would be another one. I actually have a brand now that's thinking about offering a subscription product that just started it and we're going and looking at the first 3 months of data and going, "Holy cow, the subscribers are super valuable." But before we go hammer money and just pound money into that group, we're getting a little more aggressive and then we're going to watch months 4, months 5, months 6 and say, "How aggressive should we really get before these customers are actually worth getting?" It's not a supplement brand or anything like that.

You're just playing this trade-off game, okay? So that's part of it is that the AMER is a lot worse. And part of that the interesting thing about that is that part of as the CAC is a lot worse, okay? Um along this line, but there's another factor here and I think this is another thing that people really underrate, which is the AOV. So, again, I'm going to use the conditional formatting so you can see the the AOV in this case.

One of the things that drives CAC up in a business is uh is higher AOV. So, it's possible that you should pay more for certain customers if those customers buy more stuff, right? And so, if you look in this chart again, you'll see that uh one of the things that happens here is that CAC goes up uh along the way. Again, I'm going to do one more conditional formatting here. CAC uh is the highest. Now, in this case, the uh we would actually want to reverse conditional formatting.

Let's see if I can fix it really fast. Now, I'm not going to I'm not going to bother. Okay? So, in this case, green is bad, okay? And and just this one column, if you're watching this video, but if not, it's okay. The highest CAC is also associated with the highest AOV. That's super normal in businesses, okay? But, the the problem here uh or what what happens here is those high AOV customers come back, even though they come back at a lower rate, their retention rate is lower than other customers, they're they're paying a bunch of AOV down the line.

This is an average AOV across all their orders, okay? So, because they're paying a bunch of money down the line, uh even though they have a lower retention rate, their AOV is so much higher that they end up creating a whole bunch more value. And therefore, uh and therefore, they create more value for the business even though they have a higher CAC. And so, in that case, you would rather pay more for those customers cuz they're really good even though their retention rate is bad.

And so, now we're talking about trade-offs in a bunch of ways. Now, we have retention rate, subscribers versus non-subscribers and how that plays into this. This is a made-up business, so like I just you know, uh I I sort of made up some higher numbers at some points. So, we'll assume that's more subscribers or not. Uh uh but uh but there's a higher retention rate uh uh for some for some periods. There's a higher CAC and a lower CAC for some periods.

There's a changing AOV's over different times. There's also changing AOV's on the LTV orders, okay? On the future orders. And we've left out one really critical thing, which is volume. And I think this is maybe the most underrated thing in all of this, which is it's fine to play with all these games, but how much total volume can you actually get at different ones of these offers? And I think a lot of brands shoot themselves in the foot here.

Like maybe you can get a bunch of subscribers, but it might be hard to do it at the volume that you want, okay? Uh and now listen, there's definitely exceptions to this. There are subscription brands who are doing unbelievable volume. Again, I I think I Yeah, you think about Groom's right now. It's like they've they've done this at a huge amount of volume. But it's it's it's possible that your brand doesn't work like Groom's, okay?

Or whatever, Mars men has a you know, public giant run rate, which we know because Zach posted about their raise at some point and it's this huge run rate. So they're clearly it's possible to do plenty of volume with subscription, okay? I'm not saying it's not possible. But but but but at the CAC you want etc. may be a trade-off. And uh and so in this case again, one of the things that's happening here is that there's a bunch more volume.

I won't even do the conditional formatting on more recent cohorts and that creates a bunch more LTV to CAC volume. Now, it's one thing to say, "Oh, well, maybe they just got better at marketing over this time and they're getting more volume cuz their ad accounts is working better or something like that." Intelligems is one of those tools that people who like this episode ought to be using in their e-commerce business.

I say that because if you are willing to work through an episode where I'm going through spreadsheets and showing you trade-offs and details of math and all these things, you're the kind of operator and thinker who cares a lot about really driving margin in your business, having real clarity to operational excellence across everything you do, and that means you're the kind of operator who can get a bunch of value from split testing led by CRO way beyond the basics with Intelligems.

That's what they have built a tool for is people who are really trying to think carefully about all the value trade-offs in their business and they understand that's how business works. There are trade-offs. So you can build a split uh pricing split test tool. What is maybe a bunch of value in your business by raising the price? Well, okay, if you raise the price of a product, how much is that going to affect your conversion rate?

And And okay, let's say it lowers your conversion rate. Well, how much? And what does that do to your profit per visit? And all those things. And so, you see the details of your split test down to the level of profit per visitor and profit per visit because that's the most important metric that you're going to do. You can even work see that relative to LTV expectations. You can test all the biggest needle movers on your site, including the price of your products.

Things I love testing would be like free shipping thresholds, how much you charge for shipping, the first purchase offer customers, you know, the 10% you give every new customer who comes to your comes to your store. You just check out changes, which is a really big deal at this point, so you can, you know, has a massively disproportionate impact on how people interact with your store. >> [music] >> Just everything you need to do.

It's easy to use, easy to install. They're incredibly helpful when something goes wrong, which these things can be tricky, so they're incredibly helpful. Go check out Intellijem right now. Use the code Faris20, f a r i s 20 for 20% off your first 3 months of Intellijem. If you are serious about driving profit in your business, Intellijem is one of those amazing tools that basically all my customers all my clients are using.

You should be using it, too. Intellijem.io Faris20 for 20% off your first 3 months. Go check it out today. But, it's also possible that the offer you have has a smaller or larger TAM and that you have to find offers with different products that actually hit people in different ways. I was looking at a business the other day that was a skin care business. It's not Bambu Earth, if you're wondering, cuz you've heard me talk about that business before.

And just, you know, at the product level, the individual product level, the amount of volume was wildly different. Of course, everybody knows this. There are some products that just seem to have more TAM than other products. And I think this is true with various levels of offers, as well. Now, the point of throwing all those numbers at you is not to say that you should or shouldn't do anything in particular. The point of throwing all those numbers is not for you to remember anything that I just said, specifically.

The point is there are tradeoffs in your business with your ad spend and with your retention. And you need to think really carefully about those tradeoffs instead of just investing, you know, in one place versus another because there's a better retention or not or because you should get subscribers or not or whatever it is. It's incumbent on you as an operator and as a thinker about e-commerce businesses to follow and watch all these trade-offs and to have this mentality down to the level of product.

Again, even if it's not a retention business. Again, I looked at another business the other day that had product A 50% increase in in customer value over the over the course of a year. Product B, it was 75% okay? Dramatically better retention rate on product B versus product A and we were acquiring those those customers at the same CAC. That's a problem. Now, we didn't realize it at first that we were doing that. That's the reason why we were and there's some questions about how much that will hold if we spend more on on ads and blah blah blah.

But, probably we should be willing to spend a little bit more money for those 75% customers and it's just a matter of digging in to the data and there actually may be a huge bunch more volume if we go and offer on those products with 75% LTV or the opposite could be true. It could be the case that we put in all this effort to get 75% retention 75% increase customers, but actually the volume is a lot lower. And so, it's not as simple as you think.

And in the end, the thing that I think brands need to think more about is what is actually great for the customer and what creates the best experience for them. If you can do that, my guess is many of your retention problems will be solved and many of your retention problems will work. There is a way in which smart brands take this kind of information and they bring it down into offers. Like I was talking about with Sherene, I think I said mentioned Sherene earlier and and Bobby, the formula brand I talked Sherene about offers before.

Uh there's there's a way to think about offers in your business, which is really what this all comes back to because the offer is going to dictate the retention rate in many ways, okay? Where you think, how do I squeeze the most value out of the customer? There's another way of thinking about your offers though, which is how do I provide the most value possible to the customer in a way that makes economic sense for my business.

And when you do that, you treat people like people and you assume they're going to have certain category expectations and you bend over backwards to be great and do an amazing job with your business, you'll find incredible outcomes in the business as you go. So, retention is a giant bunch of trade-offs. It is too simplistic to say just go get the highest percentage customers. Instead, think about all the different trade-offs you're making between volume, between AOV, and between everything else.

It's going to make it more complex, and of course, you pull one lever and it might another one might move. Uh but that's the way to think about retention in your business. More complex than than it often looks. >> [music] >> Thanks so much for watching or for listening. This is the kind of stuff AJF Growth is doing with our clients all the time. Trying to think through these kinds of details >> [music] >> and providing them.

And so, if you are interested in working with us, talking with us, any of those kinds of things, we don't really have a lot of client space right now. Um but shoot me an email and see if maybe something will open up at some point if you want us to work on your business. I'd love to talk to you. ajfgrowth.com is the place to give me a little bit information about your business on our intake form or email me podcast@ajfgrowth.com would work great.

Any other comments or questions or thoughts you have or anything like that would be awesome. Uh also to send a review at email. Also, I'd love your your um comments uh on this video uh wherever you're watching it. Especially if you're on YouTube, I'd love to go engage with those comments. I see those really fast. Really easy. [music] And uh I try to interact with every one of them. So, thanks. Big thanks to Move Supply Chain.

Big thanks to IntelliGyms. Links for both of those are in the show notes. I love both of those partners. Been working with both for a long time. You should be working with them, too. Uh >> [music] >> and uh thanks so much. Don't forget to subscribe. Uh spell full wherever you're watching or listening. I'll see you next time.