🧠 CHAPTER 3: The Modern Buyer Brain: "ACQUISITION = RETENTION"

Let's get right into this one because this is one of the biggest misconceptions in all of e-commerce. The title of this chapter, chapter three that we're on, remember, we're doing a series here of of 10, is acquisition equals retention. If you just remember that headline, you're better off for listening to this episode already, but let's dive into it.

For years and honestly still today, marketers love to split budgets and teams into two neat tidy buckets. Acquisition over here. Retention over there and acquisition has a budget and a team and people, and there's a retention team and budget and people, two completely different strategies, two different KPIs, two teams, and often two totally different world views how they see the customer.

But here's the reality that nobody wants to talk about. Acquisition is. Retention. They're the same thing. They're two sides of the same coin. The biggest retention problems most brands have is actually their acquisition strategy. You acquire the wrong customer. No amount of can fancy cancellation flows.

Save offers can rescue that relationship. You can't save someone who should have never been there in the first place. And this is where a D2C gets it Backwards. Brands spend 80% of their budget on acquisition. They blast ads like they're playing whack-a-mole to optimize AB test for cheap first purchase.

To think that that's actual return on ad spend, but then they act shocked when their churn is 12% a month. If you acquire poorly. Retention math becomes impossible. Lemme say the line I said in the interview. And remember, this is all based off of a full interview I did. If you bring in the wrong customers, no churn tactic can save you.

And I wanna unpack this cheap acquisition creates expensive churn. Here's the trap brands celebrate cac, customer acquisition costs, like it's the Super Bowl. Like I see people wear, actually wanna, I've seen people wear t-shirts. Small CAC club. I love it. I think it's hilarious. Look, we, we get customers for $11 less per subscriber, but meanwhile, half of those subscribers bored at 11:00 PM hit subscribe.

They churn before their first refill ever, even ships. Cheap acquisition means often the wrong customer, the wrong expectation, the wrong promise, probably the wrong buying intent, what that customer actually wants. And once they get the product, that's when the disappointment starts. Now you can throw discounts at them, you can throw crazy offers.

You can block cancellation. You can have cancellation flows, which you 100% need to do. You can send emails begging them to stay, but at the end of the day. It doesn't matter if you acquire customers who aren't aligned with your product, your brand, or more importantly, your membership experience, retention.

It's really a mathematical death, death sentence, like you won't be able to get out of it. Now, retention isn't a later thing. It's not something you do later with a customer. It's actually a front loaded thing, and here's where onboarding is, where retention actually begins. Your retention team should be.

Your onboarding team. So let's talk about the part that most brands completely ignore the moment immediately after checkout. You know, there's that moment. There's a biochemical gift I like to tell some brands. It's when someone clicks that checkout button, there's a dopamine spike in their brain. It's, it's a reward loop.

The endorphins are released and what most brands do in that moment, we've talked about this before, they send a bland order confirmation email. Maybe one thank you. Email after. For most it's just the order confirmation email, and even though it's one of the most boring plain emails in the world, do you know what the most opened email on the entire internet is?

An order confirmation email. So I probably arguably the biggest missed opportunity here. It's the thanks for your order, here's your receipt, and then you know, silence for a week. And by the time the product arrives. All that excitement from that dopamine hit. It's dead. Now compare that with some of the smartest brands out there.

They treat that dopamine like moment, like a once in a lifetime opportunity because it really is. And here's what smart brands do. In the first 24 hours, they have the first email. It's immediate, it goes out, you know, reinforce that decision. You made a great choice. Here's why. We talked a little bit about this in the last chapter.

30 minutes later, if you wanna go deeper into this, go read, listen to chapter two. Email number two goes out 30 minutes later, show results, showcase studies, testimonials, show outcomes. Here what, here's what you can expect to feel like. Here's what customers have used this product for. Here's three things people have built with this tool.

Whatever it is, 60 minutes later, uh, send an email behind the scenes how it's made, what's your company is like. Why does it matter how it's made? Email number four at some point in the same day, notice that first one was immediate. 30 minutes, 60 minutes. That's three emails within one hour, and I promise you, your customers will not be upset.

In fact, you're actually training them to engage with your content, which not only are you building. Relationship with that customer, you're actually, because it's the highest opened email, you're actually getting them to open your emails, which then tells their email account that your email is good email, so it won't end up in the spam or maybe the marketing folder.

It'll end up in their primary inbox. So you're actually training their email client to think that. Your email is what they want to see and you have that window, that first day. Take advantage of it. If you email them these emails a week later, I guarantee you they'll hit. Spam or unsubscribe or it'll end up somewhere else other than their primary inbox.

You know, send a fourth email set expectations, shipping timelines, like what? When are they gonna get it? Um, what to do when you unbox it, you know, this isn't over emailing. This is onboarding, this is relationship building. This is education at its finest and customers are excited for it. Use this opportunity like a gold mine.

Of time that you can message your customers. It's a once in a lifetime opportunity with a customer from that first purchase. Once that excitement fades, it's gone and you can't bring it back. You can't bring it back. Even with a big discount down the road, you can't make it bring it back with a big marketing announcement.

You only have that moment right after they purchase. You can of course send panic retention strategies and things later, but it's not the same. So retention doesn't start when they threaten to cancel. This is where most brands get it completely wrong. They think retention starts when someone clicks cancel.

But that's not retention. That's emergency triage, I wanna call it that. That's paramedic level retention. That's like scrambling to bring someone back to life because you didn't build a strong enough relationship from the start. Real retention begins with aligned acquisition. Meaning your customers are understanding what they're buying.

You're acquiring the right type of customers. You're acquiring customers who understand your product, who are maybe referred the right way. Retention begins with the right offer. And by right offer, I can get people to convert with some crazy first month offer. Um, but that offer might not be the right offer.

It. Retention begins with expectation setting. It begins with onboarding. It begins with education. The, the more someone knows about your product, the more they value it. It's like, this is like one of the oldest tricks in the book. Like when you learn about a bottle of wine, you are willing to pay more for it if you don't know anything about it.

It's a $10 bottle of wine until you know what it's about. Retention begins with emotional connection, knowing more about you, your brand, your company, your story. It also begins with membership framing, starting that membership journey early on, and this is why I always say. Acquisition and retention are not separate teams.

They're one system, one funnel, one psychology, one customer journey. You don't fix churn in the cancellation flow. You fix churn. Starting at the ad level, the landing page, the offer, the positioning, those first emails, their first unboxing moment, maybe that first reach out that you do with them. Retention is the sum of every.

Decision you make before the customer's first order arrives. Think about that for a second. Not after three months. Every retention is the sum of every decision you make before the first order arrives. Ask yourself right now, are you handling that whole journey properly? If not, you're gonna have a retention issue.

Now here's the real kind of math behind this. Let me give you a, a stat that should make you, might make you sweat a little bit, but BA and Co did a study and found that increasing retention by 5% actually increased profit. Minimum 25% to 95% because re retention compounds. So not revenue profit. And also because there's a number of factors that went into the study.

If you, if you search Bain and co uh, retention study, customers who you retain are five to 25. Times costs less to market to. So when you message them other offers in the future, they're more likely to convert. And this is why increases profit 25 to 95% just by increasing retention. 5%. And so guess what? The the single biggest driver of that first cycle churn is, we call first cycle churn is they get the first month and then it's that second month.

The single biggest reason people cancel on first cycle churn. Is bad acquisition that customers bought too fast. They bought without intention. It, it was a, it was a, it was a sporadic purchase impulse to purchase. They bought with the wrong expectation. They bought for the wrong reason. Maybe they were over promised.

They bought after being misaligned with your product. And retention isn't a backend metric. It's actually a front end strategy 'cause acquisition. Equals retention, which equals acquisition. It's actually a loop. It goes around, I say this again, acquisition equals retention. Good retention turns into acquisition because those customers buy more things from you.

And so here's kind of the final twist on all this. When you acquire the right customers and you onboard them, well, they don't just stick around. They refer the best customers, refer your best customers. Referrals are really. The only true way to break out of, I call it the subscription death curve. I'll put a link to that in the show notes.

I've done talks on this at subs Summit and other conferences, but unless you have a healthy referral strategy and program, you will hit the subscription death curve in the subscription death curve. Just picture a graph going up and then flattening. And what that is, is every. Recurring revenue company hits us at some point.

It's no matter if you're acquiring a hundred customers a month, 10,000 customers a month, at some point your churn is going to equal the number of customers you churn. A month will equal the number of customers you acquire and you flatline. The only way to actually break outta that is when. Your customers refer at least 1.1 customers for every customer that you acquire.

And that's when you actually break out of that, uh, subscription death curve. That is when your acquisition strategy actually fuels your retention strategy, and then your retention strategy fuels your referral engine, and that's when you get this. Compounding growth, this healthy growth, and you never flatline.

That's when your subscription curve actually turns into that hockey stick that everyone wants. It just goes up and up and up. Watch the talk on that. It's a, it's about a 26 minute talk. It'll blow your mind. I had so many people come up to me after I did that talk a few years ago and literally say.

That 30 minutes made this whole conference worthwhile for me. I actually had some people come up to me after and say, can you do that talk again for me, for my whole company next week? I had people linked in messaging me during the talk, like literally swearing, like, oh my, this is the best talk I've ever heard.

It's eye-opening how it actually works and it's all based on. Uh, real examples that I did in the talk. So just if you search subscription death curve, it's on our YouTube channel. If you go to the Shopify 1% YouTube channel and search subscription death curve, you'll see it there. And so. Here's the takeaway.

Stop thinking of acquisition and retention is two different things. Hopefully that is clear. Acquisition is retention. Retention is acquisition. They're the same. They're all part of the same eco ecosystem. You don't retain customers by saving them at the door. You retain customers by choosing them carefully, onboarding them intentionally, and designing an experience that.

Amplifies the excitement they already have. When they click checkout, they already have it. You just have to amplify it. Think about that for a second. You don't have to create it, you just have to amplify it. So retention starts that moment when excitement peaks, not when a customer threatens to cancel.

And so here's my, my challenge. I'm doing a challenge at the end of every one of these chapters. Here's my challenge for you with this. One is fixed retention. Before it even starts. So five kind of steps to this all line here. One, rewrite your acquisition promise. So audit your ads. Go and look at all your ads, what they say.

Look at your landing pages. Look at your messaging. Is the promise aligned with what you actually deliver? If it isn't, you will have a retention problem. Number two, build a. Smart or dumb customer filter. And so what I mean by this is like, who is the wrong fit? Who churns fast Stop acquiring them. Even if CAC looks cheap, stop acquiring them.

Look at the customers that have high LTV. They might have higher cac, but they have much higher LTV Acquire those customers 'cause they're gonna also refer more customers that look like them. Number three. Audit your first 24 hours. Be your own customer. Buy your own product, subscribe to it.

See what that experience is like. Like we get so caught up in the trees, we don't see the forest sometimes. What is, what is your thank you page? What does your email look like? What? What are you getting 30 minutes later, 60 minutes later, the same day the next day. Like just audit it. Be a customer, eat your own dog food as they say.

How many touch points are there? How much excitement is there? How much education is built into these? You need to send minimum three emails in the first 24 hours minimum. I will stand by that. I, that, that is the hill. I will die on minimum three emails, first 24 hours, I send more. But you, that is a golden opportunity.

You will never get back the first 24 hours. You need to send at least three. If that's the only thing you take from this episode you'll be ahead. Number four, add one emotional moment. Okay? So this can be something, something that connects them to you. It can be a founder story, a picture of you, a behind the scenes video, a personal thank you personal video.

Something that you would classify as an emotional moment that your customer is going to experience with you. Do you even have one right now? Is there any emotional moment or is it just transactional? So just add one. That's my challenge on it. I'd, but it's ideal of course, if you have more, but my challenge is for number four, add one emotional moment.

And then number five is. Remove friction before it becomes a frustration. And what I mean by this is like, clarify when when someone places an order, clarify the delivery timeline. Like, don't even, the, the customer should never even have a chance to become frustrated, to guess, to be confused. Set expectations, like what is it gonna be when they open it?

Send them information ahead of time if you think there's. Forums they need to join. Like I just bought a 3D printer and I actually, it wasn't the greatest experience. I, the order confirmation email was very bland. I already know that I'm. I think I'm gonna need to join some forums and, and communities to, to download the templates for these 3D projects.

But I don't know where to go. I would've loved to got an email that said, here's five communities you should join. Here's how you're like, I was super confused. I'm, this is my first 3D printer and I, I have no clue. I know some of you listening are gonna be like, oh my gosh, it's your first 3D printer. But that was a huge, huge miss on this company's part.

Set expectations, give control. This one I think goes without saying, but like before friction even starts in managing a membership and a subscription. And give control, give options, remove any surprises. Because when you do all this, acquisition becomes retention. Retention becomes growth, and the churn stops being a fire you have to put out.

And it actually becomes a signal that you rarely see. It's not, it's a symptom that just goes away. That's it for this chapter, chapter three. Make sure you join me on the next one, chapter four. We're gonna unpack another, another part of this whole modern buyer brain journey that we're on. Hope you're enjoying these.

If you are, make sure you leave a positive review in the comments, not the comments, in the comments, or in the whatever show you're listening on. Thanks so much everyone. See you on the next one.