Existing customers cost less to acquire than new customers because they know, like, and trust you.
Retargeting campaigns win them over more easily…
But you probably have them on your email list anyway. Even easier. No need to spend money on ads.
To retain customers, subscription-only brands need only to minimize churn rates by creating an excellent onboarding experience and delivering good customer service.
Consumable brands need to push one-off customers to subscription customers.
But what about nonconsumable products?
What if you sell bikes? Or shoes? Or furniture?
(Assuming your product is high-quality and long-lasting, of course. And that you have great customer service if something breaks. Planned obsolescence is NOT cool.)
Once someone buys one bike, shoe, or computer… they surely don’t need another of the same thing for themselves.
That, my friend, is where the “Retention Ceiling” becomes vital.
What is Customer Retention?
Customer retention is your ability to keep customers with your company within a given timeframe.
From a mathematical perspective, it’s the % of customers who stay with your company.
“Stay with your company” can mean something slightly different depending on your business model.
For instance, if you sell subscription-only offers or offers that lend themselves to subscriptions (like supplements), retention is how long you can keep someone subscribed/continuing to buy. The longer you keep the average customer subscribed, the better.
If you’re a nonconsumable brand, retention’s a bit different. There’s more of a reliance on maintaining engagement with customers across marketing channels.
Purchases happen less often and require more of that engagement per purchase… but that’s the ultimate goal of nonconsumable retention — get your customer to buy every nonconsumable you have.
And so we get to the Retention Ceiling…
What is the Retention Ceiling?
The Retention Ceiling is the maximum number of nonconsumable products you can reasonably expect an individual customer to purchase. It is the “end” of the customer’s Customer Journey, so to speak.
For example, imagine you sell those “headband” Bluetooth headphones. You have a pair for daytime use (more durable) and nighttime use (softer and more comfortable). You also sell speakers on their own in case customers want extra pairs.
Realistically, you can expect a single customer to purchase:
- One pair of daytime headphones
- One pair of nighttime headphones
- Two replacement speakers (one for each set of headphones)
For a total of four items.
Your Retention Ceiling, therefore, is four products. The average customer for a brand like this will only need one of each headphones for themselves (two sets of headphones), and one replacement speaker for each type of headphones (two replacement speakers).
Why is the Retention Ceiling So Important?
Customer retention is key to maximizing your profit margins and growing your company sustainably. The old maxim “it costs less to acquire an existing customer” is generally true because:
- The customer knows, likes, and trusts you (assuming your offer is good)
- The customer has “committed” to your brand by buying (a bit of a psychological thing)
Plus, by building loyalty and trust… existing customers might just bring you warm leads via word-of-mouth. So front-end acquisition becomes a bit cheaper as well.
However, when you sell nonconsumables, you can’t sell the same product to the same person a theoretically infinite number of times. So you can’t push the customer to continuity (subscription) like you can with, say, supplements.
(There are ways to sell the same product more than once, but more on that later in this article.)
Thus, to generate more revenue from the same customer and maximize your retention, you must sell them your other offers.
What Factors Impact Your Retention Ceiling?
A few factors impact your Retention Ceiling:
- Product range: The more products you have, the higher your Retention Ceiling. A brand with 10 nonconsumable products has a higher ceiling than a brand with two.
- Product categories: Each product category may have its own sub-Retention-Ceiling. Depending on the categories, they may not blend well to contribute to an overall retention ceiling.
- Customer needs: Customer needs also impact your Retention Ceiling. In fact, they can limit the impact of your product range on the Retention Ceiling. If you sell 10 products, but most customers only need three, then your Retention Ceiling is likely three products.
- Pricing/economic factors: A product that is just out of reach financially for customers is essentially outside of the Retention Ceiling. Thus, your pricing, alongside economic factors, can raise your or lower your Ceiling.
How to Determine Your Retention Ceiling
The first step is to determine your Retention Ceiling.
I will lay out three steps that start from the widest possible view. This will help you compare your “theoretical” Retention Ceiling(s) (aka your goal) to where you are now… and how possible it is to reach that theoretical Retention Ceiling.
Keep reading…
Take Stock of Your Product Range
Note each of your categories and their products. Look at each product’s price point and features/benefits.
Depending on your business model, each category may have its own “sub-Retention-Ceiling” that you can max out.
And, also, your business model will determine the possibility of cross-selling customers across categories to reach a larger overall Retention Ceiling. More on that later.
Understand Your Customer Audiences and Journeys
Next, look over your customer avatars and journeys. Note customers’ problems and goals at each point in their journey and see if you have a product that solves each problem and helps them achieve each goal.
Keep in mind: The more categories/offers you have, the more avatars and journeys you may have… and so you may have several “sub-Retention-Ceilings” to track.
This will give you a “theoretical” view of your Retention Ceiling and where you have opportunities to work toward or raise it (more on that later).
You next need a view of the reality — and that’s where the next step comes in.
Look at Customer Data
Your customer data validates/invalidates your assumptions made when noting your theoretical Retention Ceiling(s) in the previous step.
It tells you how close you are to hitting your Retention Ceilings in the previous step… helps determine ways to get there… and whether your actual Retention Ceiling(s) laid out in the previous step are even viable.
Oh, and it can help you incorporate previously unseen customer research into your avatars and journey for more accurate avatar/journey mapping and Retention Ceiling efforts.
How to Hit Your Retention Ceiling
Let’s look at a few ways to hit your Retention Ceiling…
Upsell, Cross-Sell, and VIP
Email marketing is the core of your Retention Ceiling strategy. Anyone who has bought and is on your list can be upsold and cross-sold other products.
Cross-Sell Sequences
Cross-sell sequences sell your customer a complementary product. If you sold them a pair of
For instance, say you sell smartphone cases. Your customer just bought a case. You could cross-sell screen cleaner/cloth, screen protectors, and maybe even headphones if you have them.
NOTE: Go beyond cross-selling flows by cross-selling as the customer builds their cart. Think of Amazon’s “Frequently bought together” feature. It shows other products customers often buy with the product being viewed… and a one-click add-to-cart for all three. Easy way to increase AOV on the front end and hit your Retention Ceiling earlier.
Upsell Sequences
Upsell sequences sell your customers on “higher” versions of the product they already bought.
For example, say you sell
Upselling is a bit more difficult than cross-selling in the nonconsumables arena. Customers may not need a better version of what they just bought as much as they need a complimentary product.
So focus on the cross-selling first.
NOTE: Like cross-selling, you can upsell throughout the checkout process to clinch the additional sales more quickly.
VIP Segmentation
VIP segmentation lets you reward your top 10% of customers while creating a feeling of exclusivity and “elite” status.
Some perks you can offer your VIPs include:
- Exclusive sales/discounts
- Bigger discounts than non-VIPs
- Early access to promotions
- Free stuff
All of this encourages customers to buy your other products and stay loyal to your brand.
To start up your VIP program, group your top 10% of customers by revenue or LTV into a “VIP” segment.
Then, craft a VIP sequence that triggers based on the VIP revenue threshold (determined when creating your VIP segment). Hand out a fat discount to customers when they qualify.
It’s best to keep the VIP program secret. Makes it feel cooler and more exclusive when a customer “randomly” receives their VIP invitation. Might even create a buzz and get your VIPs to mention your brand to friends and family.
Create a Loyalty Program
People like to earn points/cash/free stuff when they purchase. Racking up rewards just for paying money is compelling. It gives customers another reason to buy complimentary products if they’re on the fence.
(This is why everyone gets cashback cards. And why every brand has a loyalty program.)
So set up a loyalty program.
The program’s structure will vary by your business, offers, pricing strategy, financials, and so on. Do a bit of planning and math ahead of time so you don’t have to tweak it regularly in the future.
Revamp Your Copy
Perhaps you have an incredible offer, and a target audience with a burning problem your offer solves… but they just aren’t buying.
Your copy could be the issue.
Check in on your market research. Dial in your customer avatar to understand what kind of messaging resonates. A/B test new messaging to unlock sales on products customers aren’t buying too often.
How to Raise Your Retention Ceiling
You’ll hit your Retention Ceiling when you follow the tips I laid out above.
But maybe hitting that ceiling isn’t enough for you. You want even more. You want to go for greatness.
The great thing is that you widen your margins by hitting your Retention Ceiling. You have more capital to play with. You have ascended Maslow’s “Business” Hierarchy of Needs.
You no longer need to worry about “survival” aka sales. It’s time for your business to “self-actualize” (sorry, the analogy’s falling apart)…
And that involves raising your Retention Ceiling.
Here are some ways to do that:
Launch New Offers
The simplest way to get a customer to buy more nonconsumable products?
Sell more types of nonconsumable products.
For instance, say you sell small kitchen appliances. You currently only sell blenders, toasters, and food processors.
Once a customer buys one of each, there’s little chance they need another.
To raise your Retention Ceiling, you might add other small appliances to your inventory. For example, you could start selling air fryers and coffee makers.
This may be simple, but it’s not always easy. Keep in mind that your customer must have a need that your new offer solves. So back to the market research drawing board for you.
Bonus: If you can add a consumable or even semi-consumable product to your lineup, you’re golden.
For instance, if you sell coffee makers, maybe you branch out into the coffee space. Or perhaps you sell disposable coffee filters. Or even replacement parts. Ideally, your product is durable, but products with multiple parts inevitably need replacements.
Another example: A fitness equipment brand could start selling lifting chalk, a consumable item.
Upgrade Your Product Line
This one’s similar to the “Launch New Offers” tactic. Let me give you an example of upgrading your product line:
You sell regular coffee makers. The type where you put in the coffee and water, then press a button. No fancy features.
You could start selling coffee makers with more advanced features, such as programmable start times.
A customer with a regular coffee maker might get a more advanced coffee maker to replace their old one or even to complement it.
Identify New Customer Needs
For example, say you sell a single set of wireless headphones. That’s your only product. Customers don’t need another pair once they have their first…
Or do they?
Tell me: Have your headphones ever died, leaving you without music for your workout?
Sure, you could be vigilant about charging them… or you could buy another pair. Charge the dead ones while using the charged ones.
Apply this logic to your customers and you just opened up a new customer need.
We can take this even further for a headphones brand, though.
When I travel, I take a set of headphones with me. As do most people.
Forgetting these at home is a pain in the rear. It’s even more of a pain to leave them behind when I return home.
Purchasing a second pair and leaving it in my luggage
But what if a customer already has two pairs in case one dies?
You can still sell them a third pair, or even a fourth, by highlighting how convenient life could be if they had two extra sets exclusively for travel.
Sell Gift Cards
From a cost and time perspective, gift cards are perhaps the easiest way to expand your retention ceiling.
You don’t need to develop new products or do in-depth work on the customer journey or your positioning.
All you have to do is announce that you now have gift cards and run relevant campaigns, such as holiday and birthday-themed campaigns.
Gift cards are more “liquid”, so to speak. The recipient can choose what to buy from you rather than get “stuck” with one product that the customer would otherwise buy them.
It also makes the gift card purchaser’s job easier. They don’t have to think about what to buy the friend or relative, reducing friction.
Widen Your Profit Margins By Hitting Your Retention Ceiling
Every brand can benefit from better retention. But nonconsumable brands face a unique challenge — selling more products to customers who don’t appear to need them.
The key is identifying your Retention Ceiling by evaluating your customer audience(s) and product selection.
Nonconsumable brands must focus on not just hitting… but growing their Retention Ceiling to grow sustainably while insulating themselves from competition and economic downturn.
For Step 1 (hitting the Ceiling), Implement upsells, cross-sells, and a VIP sequence. Create a loyalty program to inspire more purchases and A/B test new copy for your weakest-performing copy assets.
For Step 2 (raising the Ceiling), launch new offers, upgrade your current offers, identify new customer needs, and sell gift cards.
It is 100% possible to get lots of repeat business when you sell high-quality nonconsumables. You just have to get a bit creative.
What to Do Next
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- Work with me if you want to earn more revenue, widen your margins, and improve retention through email and SMS… so you can quit worrying about acquisition.