Asking the Hard Question: Is My Business Sustainable?


Share on LinkedIn

It’s no secret that the past year has caused seismic shifts in how we approach nearly all facets of life — including how we shop. Whether it involves a simple grocery trip or the average shopping errand, our tendencies as consumers are more volatile than ever. This fragility has forced brands to ask themselves, “Do I have enough customers walking through the door?” and “Am I doing enough to keep them?” The reality is that the behavior of paying to play is simply unsustainable. If you need to pay 20 dollars to acquire a customer, for example, and then five more dollars for each subsequent order, you have an inefficient approach that is unlikely to be sustainable in the long-term.

The example underscores a new era for business sustainability, one in which a company cannot just focus on acquisition — but on retention and resilience. Being acquisition-focused is important, but only at certain times in a business’ journey. As an early startup or in a high customer demand and high growth industry, for example, acquisition is and should be a priority. However, there are simply no more bottomless investor pockets to go around. Avoid tunnel vision and forming bad habits, which occur when acquisition is prioritized without having proper economics in place. You wouldn’t spend time on securing new customers if you owned a shoe shop with low inventory and untrained staff, would you? You’d dust off your shelves, display attractive products, and train a warm and welcoming staff!

If you have the means to provide a positive customer experience, then you can keep acquisition AND retention in balance, keeping consumers engaged in a meaningful way. Remember: a relationship with a new customer only makes sense if the business is able to make a profit throughout the customer’s lifecycle. Revenue becomes a vanity metric if you don’t have mechanisms in place to reduce your cost of revenue. It’s best to focus on balancing customer acquisition cost (CAC) to customer profitability (LTP) ratios.

So, how can you determine your business’ sustainability? It requires a harmonious balance of activation, engagement, and retention. Here’s how to achieve all three.

The obvious first step in achieving sustainability is holding a concerted focus on how you initially engage with your customers. Recent data from Braze found that consumers who receive messages through at least one channel from brands are 7.2x more likely to make purchases, make 9.8x more purchases, and are retained 3x longer. Furthermore, 67% of companies who described their customer engagement as “excellent” exceeded revenue goals in 2020. The only way you can activate a customer fundamentally is through your product. You hope that the customer sees value in your product or service, and then becomes a customer. The engagement process starts from the first click on the app; you need to achieve an interaction within the user’s first session. In fact, Braze data found that if you don’t become a customer within your first seven days of installing an app, there’s an over 90% correlation that you never will become a customer.

To determine the best strategy for that first engagement, first ensure that your product (which might be your website or your application) will receive traffic from an acquisition source. If this is the case, your customer understands your core value proposition and either takes action or not. After all, when consumers first install your application, they are at their most interested. The need from a consumer will never be stronger than when they are actively looking to fulfill a need. If the product makes sense immediately, they may become buyers in the first session. Otherwise, your customer engagement tools become your tools for activation.

In-app messages, often based off of some action taken by the consumer, are a valuable tool when it comes to customer engagement. When the messages are contextually connected to an action, they are highly relevant to the end-user, and make it easier for the customer to continue moving through your app experience. Push notifications, sometimes geo-specific, can become critical to engaging with users outside of your app as well. Personalization goes a long way, and making your application data operational to the point where you can feed more intelligent first, second, and third engagements to your potential customers goes a long way in terms of directing them towards something they like –encouraging further interaction with your brand.

Outbound customer engagement tools, including push and email notification distributions, can compel customers to take the first action. Consistent messaging helps a brand build a relationship, establishing habit and repetition while getting customers to discover new elements of your product or service. When you see repetition from a customer, they are building habits and becoming more valuable to you. Acquisition comes at a cost and once a customer is on board you must chase that value back.

However, customer engagement doesn’t have to be all about the product. Ask yourself: “What else does your brand offer? How else are they working to connect to the consumer? What value do you bring besides the product?” When brands can assert themselves beyond the services and products they sell, they form a deeper relationship with the customer, increasing likelihood for loyalty and retention. Non-transactional engagements, such as content or customer rewards programs, signal depth to your customers and a sense of genuity behind your actions.

Additionally, using a brand partner as a customer acquisition channel is a smart approach for continued engagement, as it offers a mutually beneficial relationship and further incentivizes. Third-party business relationships add value to your customer without eroding value in the brand over time. When you connect with a fellow business that holds a similar audience, and the partnership feels natural for the customer, both brands have an opportunity to win.

Brands often like to turn to deals and promotions as a means to incentivize customers to come out and shop. While this can be worthwhile, it is important to remember that businesses don’t survive on top-line revenue — they survive on profit. So, instead of losing revenue with a flat-discount revenue, I would encourage brands to offer tiered discounts that offer better deals as customers buy more. Vouchers are a great tool for engagement but offering face-value discounts can eat into profit margins. Businesses must utilize this form of engagement wisely.

An intense level of machine learning and artificial intelligence are currently at play to optimize initial customer engagement. Companies must reorganize to recognize now only the initial value of a customer, but also the downstream value. A brand cannot celebrate its efficiencies without also championing survival. Again, long-term thinking and profitability should be your watchwords. The best retention strategy I’ve ever seen is customer obsession.

Most customers hold Amazon in high regard as a utility in their lives and trust its service. Of course, this is not an accident. Their customers, new and old, stand at the forefront of every single decision. Competitors and other prospective channels of profit are important to be mindful of, but the customer’s wants and needs are the first and last priority. Amazon reached a point where retention and churn rates were hitting new lows. After attempting to re-engage with vouchers and resurrect old customers, they investigated. What they found is that their retention issues had nothing to do with marketing; instead, it related to a contrast between product expectation and reality.

Ultimately, poor customer service, sudden pricing changes, and delivery issues were the root of the problem. Retention is not just a marketing metric — and as a result, Amazon attacked said issues with customer satisfaction in mind, and retention spiked. When it comes down to it, the only way to improve customer retention is to improve customer service and product. Gamification in rewards and programming around high value actions can help ensure customers are transacting, but retention in itself should be built on the foundation of customer obsession.

Sustainability and Technology
Simply put, brands must stop focusing purely on acquisition. Providing a good experience for your customers is the best means for a business. With that in mind, maintaining openness for the technology that can lubricate and grow customer engagement is essential. Technology can operate in capacities that human ability cannot match at times, and therefore should be implemented in a harmonious fashion. Leveraging AI and machine learning to facilitate repetitive tasks and data analysis frees up human mind power and headspace for innately human tasks such as collaboration, storytelling and emotional connection amongst the activation, engagement, and retention phases.

However, brands beware: while tech has improved, it has created lazy marketers in certain instances. It is important to remember that customers are motivated and moved by deep emotions. They want to save time and money and to connect with people. They want health and sustainability. Technology is taking care of some legwork, to an extent, but teams must take that newfound time to experiment, test, and refine their ability to connect with those deep emotions. Marketers are moving faster than ever before within this school of thought, as they are not scared to test. Given this newfound efficiency, I advise brands to use technology to build for the business they plan to become, not to patch today’s problems. Stay focused on innovating, not just within the acquisition and activation of your customers, but also in building consistent engagement and retention to keep those people around.

Warrick Godfrey
Warrick Godfrey is the VP of Industry Solutions at Braze, a customer engagement platform that delivers messaging experiences across push, email, in-app, and more. Warrick leads the charge for the company’s industry-focused approach, using the Braze platform to deepen customer engagement and ROI at a time of rapid change in consumer behavior, marketing channels, and the competitive landscape.


Please use comments to add value to the discussion. Maximum one link to an educational blog post or article. We will NOT PUBLISH brief comments like "good post," comments that mainly promote links, or comments with links to companies, products, or services.

Please enter your comment!
Please enter your name here