Good morning and welcome (back) to our posts!
Today’s subject: Increasing the retention of a single buyer.
What if all your calculations related to how you do eCommerce with products were to change?
Stay with me until the end, as we’ll do both math and practical exercises to find out the answer.
In the last 8 months, I’ve stepped back a bit from the content area for promoting services and have been working intensively alongside the Rocket Agency team to further develop the range of services we offer and have improved existing services to the point where the retention rate of an agency contract exceeds, on average, 9 months.
First of all, what does the word RETENTION mean?
In the explanatory dictionary of the Romanian language, the word retention is explained as a form of stopping or holding.
Exactly what we want to do with a customer from an ecommerce store.
Let’s start the conversation from acquisition costs (or sales costs).
Let’s assume that today, you own a store with products that can be sold to the same customer multiple times. If you have a clothing store, today you can make 1 sale to a new customer and sell them a T-shirt, and tomorrow you can sell them jeans or a dress.
Now the conversation becomes exciting.
Today, you have ads on Facebook and you’re putting money into ads, and your acquisition cost for 1 sale is around 40 lei. If you add 40 lei + agency + transport cost + taxes + supplier + administration in your warehouses, probably this acquisition cost of 40 lei is not just slightly uncomfortable, but very uncomfortable.
Next week, the customer who came to buy a T-shirt, today comes back and buys a pair of jeans, but this doesn’t come from a paid campaign, but from an email marketing campaign or a Facebook post, or they remember your store and organically access the site and order.
Your first instinct is to say: they came back alone, organically, because they like the product. Which is completely true. However, when your customer comes back to buy a second time without a paid ad, suddenly, the initial cost of 40 lei you paid to bring this customer to your store turns into 20 lei.
Not only that, but if the first T-shirt purchased was 150 lei, and the jeans cost 250 lei, suddenly, your ROAS per 1 customer transforms from ROAS 3.75 (150 RON T-shirt divided by 40 RON Facebook ad), into ROAS 10. (150 RON T-shirt + 250 RON jeans divided by 40 RON ad).
What do all these calculations mean and why should you urgently grab a pen and paper and recalculate your entire approach? If you catch another 2 years in a row with various promotional campaigns from politics or large companies like Temu, without these calculations, in about 24 months, you’re out of business. And this will be due exclusively to the fact that at the micro level, you’ve been stingy about selling products after which people don’t come back, or if you have products that are organically sought by users for the second and third time, you’ve forgotten to press other conversion buttons, other than Facebook Ads and Google Ads or TikTok Ads.
If we return to the calculation above and add 2 more sales made to the same customer through Email Marketing or content that reaches people’s feeds, day after day, without stopping, the acquisition cost for an initial sale will transform from 40 RON to 10 RON. And here, the beautiful conversation really begins.
What is to be done in the situation where you find with amazement that your products are not sellable a second and third time?
You can choose to do sales volumes and earn small profit per order, but this would inconvenience you even more through the prism of already existing expenses, or you can, over time, migrate to a category of products that bring you recurrence. Or, you change the current product supplier with one that offers better quality and recalculate all the figures at large volumes of orders that can have recurrence from other promotional media.
Why is it important to make these calculations today, more than ever?
In 2020, when I started my career as a media buyer, I took the advertising market in the United States as a benchmark and started studying how things work for Americans. To my surprise and to the shock of the Romanian market, even then I was talking about times when acquisition costs would exceed 40 RON, ROAS would drastically decrease and things would change a lot. Today, 4 years after that post, we are very close to those predictions I made at that time.
The situation will not improve at all from now on. Temu has entered the market with many products that are MUCH weaker than those already sold by the market, but despite this aspect, it has such good prices and such a large promotional budget that it creates a big cash flow problem for you, the store owner, brings you decreases in sales and makes your life bitter.
In 2024 and 2025, average users place even more value on quality products, authentic content, and a pleasant purchasing experience. If you don’t use the entire marketing gear at maximum capacity, you lose a lot of money in the long run.
So, if you want to work with an agency that can offer you all these services, we’re waiting for you at www.rocketagency.ro where your marketing money has purpose.
Together with you, before starting the collaboration, we make the necessary calculations for acquiring a customer, profitability calculations and estimated sales calculations that can be brought, depending on the other two variables in this sentence.
Signed, Cristian from Rocket Agency who, along with the strongly developed team from the beginning of the year until now, have managed to increase the lifetime of an agency contract from 6 months to 8-9 months (and counting).
