For me, the Otter story started almost a year ago when I joined Valentin and Cristi Movila (eCommerce Director at Otter Shoes) in one of their initial talks about customer retention.

At that time they were thinking of ways to use the raw data they have to differentiate and treat customers better and according to their needs.

Multiple iterations later, a customer retention strategy was born. 

Several months into the process and actions have been taken, customer segmentations have been done and actionable insights have surfaced.

So we stopped by Cristi’s office to talk to him about this collaboration.

The story is divided into 10 short videos (each one answering one question). In case you find this post too long, you have the key takeaways upfront.

Table of contents

Episode #1 – Why focus on customer retention?

Having a data-driven mindset determined Cristi Movila (eCommerce Director, Otter Shoes) to take a step further and see what’s happening with their customers after the 1st order.

Some of the preliminary insights got after implementing the retention strategy were:

  • A very small number of customers is responsible for the biggest chunk of revenue;
  • You don’t have to drive more traffic to your website until you know your customer retention rate;
  • Traffic acquisition is just a part of the whole mix;
  • It’s more effective to target customers that you already have.

For more insights ?

Episode #2 – What did you discover during our collaboration?

We kicked off the collaboration with looking at the following retention KPIs:

  • customer lifetime value, CAC, retention rate;
  • revenue generated by the customers who placed x orders lifetime;
  • monthly cohorts of new customers to see who comes back and during which months;
  • RFM segmentation to create customer groups and detect buying patterns.

The most surprising facts discovered were:

  • Although a significant amount of traffic and orders are generated, only 30% of the customers come back and place another order;
  • Markets are limited. After a certain point, you reach a ceiling. So you need to turn to the existing customers and nurture the relationships you already started;
  • Not targeting the right customers, at the right time with the right products and messages is a counterproductive process which leads to loses;

For more insights ?

Episode #3 – Customer segmentation. Why do it?

Because customers expect you to know them and treat them according to their needs.

What Cristi advises is to pull your customers from the big bucket, create targeted customer segments and adjust your communication and marketing efforts.

One of the most important milestones in our customer retention strategy was customer segmentation done based on RFM:

  • the Recency of their latest order (number of days since last order);
  • the Frequency (number of orders placed in total);
  • the Monetary value ($$ spent until now).

What we did with Otter was to group customers based on RFM and personalize their web experience to match their needs.

For more insights ?

Episode #4 – Customer segmentation. AHA moments?

When comparing different RFM customer segments among themselves, we realized these were quite different in terms of value for the company. So we realized that:

  • Customers should be treated differently. Our customer retention strategy showed that there are very big differences between customer groups in terms of margin and revenue. As an eCommerce you should use your energy and resources wisely;
  • 1 “True Lover”* customer equals in revenue as much as 398 newly acquired customers;
  • Knowing these insights allowed Cristi to coordinate with the Call Center, Marketing, and Loyalty teams and come up with a holistic approach for the True [Otter] Lovers (and not only;

*A True Lover customer is one that has the highest score in terms of Recency, Frequency, Monetary when compared to all the other customers of that store. So a True Lover is anyone with an RFM score of 555 where:

  • 5 in Recency – means this customer placed an order within the last 30 days;
  • 5 in Frequency – means this customer is in the top 5% in terms of orders placed;
  • 5 in Monetary – means this customer is in the top 5% in terms of money spent with the store.

For more insights ?

Episode #5 – Ideal Customer Profile. Before and after insights?

Once the customer segments have been created and analyzed, Cristi and his team decided to launch a series of online surveys to understand who are the people behind the orders.

What came out of those online surveys were really “brain opening” insights:

  • Before the segmentation, there was a common understanding that the ideal customer profile was : male, 40 y.o+
  • The reality showed that the ideal customer profile is actually: women, 42 y.o+

Want to know more? ?

Episode #6 – How is knowing your persona changing your strategy?

Knowing your ideal customer profile is women 42 y.o + made a big impact on several levels in the company.

Here is what changed for Cristi and his team:

  • Changes in communication. Adjust the communication to this segment and come up with messages relevant for women, 42 y.o+;
  • Changes in the buying process. Bring more products that are preferred by this segment;
  • Changes in customer service. Train the Call Center team to carry out a discussion which is more suitable for this audience.

For more insights ?

Episode #7 – Next steps in your eCommerce growth

The silver lining is there.

The next step for Cristi and his team is to “convert” as many “Newcomer” customers into “True [Otter] Lovers”.

And the effects are already showing. Just do a quick “Otter” search on Facebook in posts and you will see the amazing personalized campaign that they put in place for Black Friday!

For more insights ?

Episode #8 – Omniconvert + Otter = ❤️

We don’t want to brag but we got a pretty good feedback after implementing the eCommerce customer retention strategy.

In fact, it was AMAZING! 🙂

What Cristi and his team got from our collaboration were:

  • Actionable insights and a hands-on approach. The 2 teams got together and started putting in practice what they discovered by looking into the data.
  • A “career path” created for the Newcomer customers to become “True [Otter] Lovers” which includes:
    • website personalization (look and feel, the tone of voice, product positioning, putting the products in context, pushing the reviews)
    • online surveys;
    • changes in packaging.

But we don’t want to spoil the surprise. For more insights ?

Episode #9 – What changed after you analyzed the data?

What other things changed after we analyzed the data? I know we talked about change before but we wanted to give this one a special chapter.

Another big AHA moment which led to some changes was linked to localization: product and marketing localization. 

It’s one thing to sell in rural areas and a completely different thing to sell in urban areas. The buying powers are completely different. 

But it’s not only about buying power. It’s about climate and weather as well and adjusting the products based on these external factors.

For more insights ?

Episode #10 – What can you get from your ?Ex-Lovers?

Ah, the Ex-Lovers. These are the customers who placed their last order with you more than 1 year ago. When looking carefully at their orders, we realized that, when they used to buy, they would place a significant amount of orders of significant values.

What did Cristi learned from surveying Ex-Lovers?

You need to watch the video for this one ?

I reached the end of my story.

But the saga continues! The collaboration started with Otter made us curious to know how other successful eCommerce businesses treat customer retention.

We conducted in-depth interviews with experts from the area, done desk research and we are currently running an online survey to get a global sense of retention.

As the journey continues, we will be updating you with what we find along the way.

Keep an ?on the next posts!