What if we told you that minimal intervention within the customer journey could lead to at least a 26% lift in orders? What if we told you that we discovered the point in the customer journey where the customer is likely to stop purchasing? What if you could quickly identify when a customer is approaching that point, and the optimal time to intervene with them? Intrigued? Let’s back up for a moment.
Acquisition or Retention? Acquisition and Retention!
Many wineries and their marketing efforts are focused on acquiring new customers and/or mailing list subscribers. It is relatively easy to measure database growth and there is an inherent satisfaction in gaining that new subscriber. While customer acquisition cost (CAC) can vary across wineries and acquisition platforms, the cost can be quite high and is typically much higher than retaining an existing customer. Some sources indicate that it can be 5 to 7 times more expensive to acquire a new customer than retain an existing one. Not only does it cost more to acquire a new customer, but selling to that customer is significantly harder than selling to an existing customer (Invesp reported the probability of selling to a new prospect is 5-20%, whereas the probability of selling to an existing customer is 60-70%). This becomes notably more complicated when you take into account where a customer falls in their journey with your brand. Are they a casual buyer, or one of your top purchasers? Can you lead a casual buyer to become a top performer?
This is where “The Dødsing Point” (our discovery and term for this key moment) comes in.
What is “The Dødsing Point”?
We think this is one of the most important discoveries for DTC wine in the last decade. Through a combination of segmentation, enhanced RFM algorithms and cluster analysis of buying behaviors per buying group, our data team led by Sara Redahan, Yash Gad, and in partnership with our director of marketing, Erica Gomez, discovered the Dødsing Point. At its core, the Dødsing Point is the point at which a majority of customers stop purchasing – their customer journey has ended. Despite its name, The Dødsing Point is not always a singular point. Sometimes it’s one key moment, but most often it’s at two critical points along the customer’s journey: the point where 50% of the customers stop purchasing, and then again at the 25% drop-off mark.
Determining how each customer cohort interacts with your brand, and what those footprints look like within the customer journey of each buying group is vital to understanding your customer database. You would not expect the person who is just beginning their journey with your brand to behave the same way as someone loyal to your brand for years. Nor would you intervene with them in the same way.
Not All Customers Have the Same Value
Every customer is important, but not every customer has the same importance. To this end, we cluster customers into four cohorts (Top Performer, Consistent Buyer, Casual Buyer, Interested Buyer) based on an enhanced RFM model, allowing us to analyze the behavior of the cohort and determine the unique Dødsing Points. The best intervention strategies happen at the two points along the customer journey (50% and 25% Dødsing Points) – with the goal of the intervention being to extend the life of the customer before the jump off the cliff. Meaning, get the customer to place more orders before they stop purchasing.
If you can extend that journey by even one order across those lost consumers, you can see at least a 10% lift in revenue. And that is based on interventions with your casual purchasers alone. Imagine what the lift would be like if you impacted your consistent buyers or your top purchasers? Not only would you be impacting the lifespan of each customer cohort, increasing their respective lifetime values, but you would be continually engaging with the individuals within that cohort, ultimately improving retention overall by impacting brand loyalty. This alone can lift a customer into higher cohorts over time.
Extending the Customer Relationship
Understanding the Dødsing Point is an essential part of extending the relationship between a winery and its customers. We estimate that if, at a minimum, you do a poorly performing weekly intervention using our Dødsing Point (1% conversion) the compounded savings and growth of your DTC business will be a 26% increase in transactions. Imagine what you can do with a super effective intervention.
But remember, not all customers carry the same importance, and understanding how each cohort interacts with the brand is vital to extending their lifespan. Additionally, interventions should cater to where a customer is in their journey. For example, perhaps the causal buyer receives an automated, generic email as they approach their point, thanking them for being a customer and receiving a code for complimentary shipping on their next purchase of 6 bottles. Or the consistent buyer gets a letter in the mail inviting them to a special tasting event. Or the top purchasers receive a personal phone call from the winery owner, asking about their experience. The type of communications offered should match the brand voice and business model, but knowing when to intervene is just as important as knowing how to intervene. Each customer is unique, and the experiences they have with a brand impact how long they stay with the brand. By giving these customers a touch of personalized interaction as they move towards their cliff, wineries can prevent the dive from happening, at least for some time.