Why Retention is Key to Controlling Your Brand Destiny: A Q+A with Sailthru CMO Eric Porres [Part 1]

Account team meeting. Photo young business crew working with new startup project.Notebook on wood table. Idea presentation, analyze marketing plans. Coworking process.

No one understands customer retention quite like Eric Porres. Before coming to Sailthru, Porres was the Chief Marketing Officer of publicly-traded programmatic marketing company Rocket Fuel, and, before that, of marketing technology company Lotame Solutions. He’s also been an entrepreneur, founding digital marketing consultancies and learning what it takes to retain his own customers while helping them, in turn, do the same.

EricPorres

At Sailthru, Porres is helping online media companies, digital publishers and retailers discover the benefits of understanding their customers in a deep and holistic way. With the availability of data and analytics capabilities to generate customer insights and experiences in a way that was just not possible before, Porres is eager to show the way forward. Check out Part 1 of our recent interview below!

Why have brands chosen to focus on acquisition for so long, and why are they now becoming obsessed with retention?

ERIC PORRES: There are at least three reasons.

If your mandate is to acquire a first-time customer, there’s a very simple KPI associated with that, so it’s appealing. On the other hand, the metrics around customer health and lifetime value have been more challenging. Team structures within marketing organizations do not necessarily lend themselves to longitudinal tracking of what are good lifetime customers vs. first-time drive-by customers. Acquisition and retention – the baton frequently gets bobbled between the two disciplines! The shift toward retention has been made possibly by the rise of  retention analytics products (including Sailthru’s) that can help them do the hard math around customer lifetime value. It’s not as hard as it once was to run a cohort analysis, where you can identify top customers and those who are likely to become top customers.

Another great channel for acquisition was search (SEM), but search is a maturing market, and costs are higher in general for acquisition than they were a while ago. The same can be said of Facebook – rising customer acquisition costs in aggregate are the norm because the ad ecosystem within Facebook has stabilized between demand and supply, giving Facebook the ability to charge more per unit of advertising sold. But the cost of data now, in terms of really understanding a customer, is so much less than it ever was. It is fractions of a penny on a dollar to understand your customers intimately and deeply. That understanding can be used to create more personalized experiences, more relevance, greater stickiness, and higher retention. In particular, we find that the best companies use their retention and lifetime value data on a per customer basis to power new customer acquisition on Facebook and they do it twice as efficiently or more. Imagine being able to predict which new potential customer is more likely to be a profitable lifetime customer – this is now possible and we’re excited to see companies like Country Outfitter take advantage of this type of capability enabled by Sailthru.

Probably the last reason for the shift from acquisition to retention is that the venture capital community that’s funded growth (albeit with a healthy dose of innovation) for a long period of time is now demanding that their portfolio companies deliver profitability. You saw this start to happen over a year ago, with venture capitalists talking about the idea that growing for the sake of growing is over, and companies need to start retrenching around profit. In fact, Bill Gurley from Benchmark (a Sailthru investor), has a lengthy treatise on this very topic.

How do you get to profit? You don’t get to profit by continuing along the same path you were on before. It costs six to seven times more to acquire a customer than to retain one, and the probability of selling any product or service to a new prospect is from 5 to 20 percent while the chances of selling to an existing customer are from 60 to 70 percent. Change is hard but the math is easy.  To become profitable is to control your own destiny. And the best way to do that is to reengineer the organization to focus on retention and lifetime value vs. blindly acquiring new customers.

What should be top-of-mind for retailers and publishers trying to improve their customer retention?

ERIC PORRES: They need to provide a consistent experience across every channel they service. The email experience should not deviate dramatically from the onsite experience, which should not deviate dramatically from the mobile experience. And that shouldn’t deviate dramatically from the in-store experience.

Up until recently, this was pretty hard. But now, when you have software that can be very purposeful in capturing every single behavior in every channel, and then apply predictions from that behavior to help out the consumer on their next likely interaction with a brand, this opens up a set of possibilities previously unimaginable. There is no reason why a marketer shouldn’t have holistic experience management in his or her grasp.

We look at ‘solving for retention’ from a perspective of personalization, automation, and analytics. These things are not as hard to do as they once were. It’s almost like magic. But you have to show how the magic trick works to get buy-in to do it.

Stay tuned for Part 2 of Porres’ interview!

–Kristine Lowery, Content Marketing Manager