Kevin Hillstrom: MineThatData

Questions About Retaining Customers

If I asked you the following specific questions, would you be able to provide answers?

What specific tactics do you employ to quickly convert a customer from a first purchase to a second purchase?
What specific tactics do you employ to convert a customer who is 11/12 months after a prior purchase?
What specific tactics do you employ for the top 5% of your twelve-month buyer file?
What specific tactics do you employ for customers with 13+ months of recency to bring the customers back into the fold?
When a customer visits your website but does not put anything in a shopping cart, do you apply any different marketing tactics via email marketing or sms to treat the customer as an (albeit briefly) highly responsive customer?

Give yourself 20 points for each question above that you could answer with at least one specific tactic.

For each question you offered at least one specific tactic, subtract 8 points if the tactic includes a discount/promotion.

For each question you offered at least one specific tactic, subtract 4 points if the tactic is generic and applies to all customers.

Total Possible Score = 100.

To put your efforts into a headphone tier list, here is how it would break down.

S-Tier = 100 Points.
A-Tier = 60 - 99 Points.
B-Tier = 45 - 59 Points.
C-Tier = 30 - 44 Points.
D-Tier = 15 - 29 Points.
F-Tier = 0 - 14 Points.

If you are D-Tier or F-Tier, you likely have a customer retention issue within your marketing department.

You can kind of see where I'm heading with my retention discussions, can't you?

Nobody Expected This

Story time!

I've told this story before, but it is relevant here in 2026. It's 1998 at Eddie Bauer. Our stores were not performing well, our online/catalog business was abysmal. I was just promoted to Director of Circulation/Analytics. Within twenty-four months our Catalog Team of Executives would fix the catalog/online business, recording the most profitable year in the history of the division.

Retail was a different story.

Our bigger stores had something called a "Sport Shop", an homage to the outdoor heritage of the brand (today the casual part of the business, at least 80% of sales back then, is completely gone). If you looked at ordinary store sales reports by category, Sport Shop had a ton of square footage and a minimal amount of net sales. It was unprofitable.

Management decided to kill it. The current generation of LinkedIn experts would chime in with the #datadriven hashtag. Good idea! "The brand has a sales dashboard and the KPIs suggested this category is simply not needed - this is the very essence of letting data guide your decisions."

Six months after the category was killed ... square footage replaced by our late 90s mens/womens casual assortment, a funny thing happened.

Existing Stores, No Prior Sport Shop.

Mens Comps: +2%.
Womens Comps: +2%.

Existing Stores, Prior Sport Shop.

Mens Comps: -2%.
Womens Comps: -6%.

Tell me what you think happened?

Our Marketing Research team asked customers what happened. Here's what they learned.

"When you took the Sport Shop away, you took away a shopping experience for my husband and I. He'd tinker in the Sport Shop for a half-hour while I bought clothes. Without the Sport Shop, my husband didn't want to waste a half-hour watching me shop."

Ooof.

Turns out the Sport Shop was wildly profitable but was measured incorrectly. We needed to measure the "spillover value" the category had. It attracted a browser (measured as $0) and it attracted a shopper (measured as $100 but attributed to Women's Casual).

Does this happen in your business?

Oh my Lord, does it ever happen!!

It happens every day on Instagram. That's where your browsers are ... no, not website browsers, actual browsers, people with no intention of shopping. It happens on YouTube when somebody is watching the video of one of your buyers traveling to Hawaii to meet with widget suppliers. It happens when somebody subscribes to the Substack of your Chief Merchandising Officer. I mean, all sorts of people have interesting Substacks that you wouldn't expect.

What is the category or marketing activity that bring in "browsers" who ultimately generate sales ... one way or another ... in a category that maybe doesn't deserve credit for the order?

BONUS STORY: You probably read this little ditty yesterday. Ten years ago I fielded a phone call from an Agency Leader. At the time I was consulting with a large retail brand that mailed catalogs. The end of the conversation went like this.

Agency Leader: Management told me you told them to stop mailing catalogs to store buyers because holdout tests proved that catalogs had minimal value.
Kevin: Correct.
Agency Leader: God you are so stupid. Everybody knows that catalogs drive customers into stores.
Kevin: Mail / Holdout tests proved they didn't drive customers into stores.
Agency Leader: Well, I am calling to tell you that we are now the agency of record, and we are reinstating catalogs to store customers on day one.
Kevin: Ok.
Agency Leader: I am also communicating that the brand no longer is in need of your services. Is that clear?
Kevin: Yes.
Agency Leader: You know better. Goodbye.

The retail brand ultimately went bankrupt. Guess all those catalogs were, at minimum, unhelpful.

I distinctly remember the "God you are so stupid" comment. The arrogance and attitude of this individual ... the suggestion that all you had to do was override science (mail / holdout tests) with faith in paper. If the results of the test proved catalogs should be mailed, I'd have recommended more catalogs. Instead this brand drained cash reserves sending mindless / useless paper to force a customer who didn't want to go to the store to go to the store, siphoning off cash for the Agency, for Paper Reps, for Printers, and for the USPS in the process.

Always do what is right for your client.

Paper, Printing, Postage: Eating Your Business One Bite At A Time

Here's the story that repeats, not one talked about by the experts on LinkedIn. The table on the left shows the optimal strategy for a customer segment three years ago ... the middle table shows it today ... the table on the right shows the optimal strategy three years from now if the expense structure continues to add challenges to the p&l.

Three years ago the optimal strategy for this customer was 9 mailings per year, generating $28.46 demand and $6.51 profit.

Today, the increases in paper / printing / postage require you to mail the customer 6 times per year, generating $23.24 demand and $5.06 profit. Demand is down 18%, profit is down 22% ... all because of the added expenses passed on to your business. You'll continue to mail 9 times per year, generating $28.46 demand and $4.71 profit ... less profitable but the majority of catalogers that remain just don't want to change.

If costs continue to increase similarly, you're down to mailing the customer 4 times per year, generating $18.97 demand and $4.14 profit. Most remaining catalogers don't want to change, so they'll mail 9 times per year, generating $28.46 demand and just $2.91 profit.

Either way, paper / printing / postage are eating your business one bite at a time. You get to decide if you want to optimize profit.

Non-Optimized Profit (the route most of you will take because you don't want to change).

$6.51 three years ago.
$4.71 today.
$2.91 in three years.

Optimized Profit (my smart clients have been doing this for YEARS).

$6.51 three years ago.
$5.06 today.
$4.14 in three years.

Again - show me where the paper, printing, and postage gurus are sharing this dynamic with you? They're not. They're running this aspect of your business into the ground. Until you stand up to them (i.e. shift your dollars out of print and into other marketing tactics until they provide you with cost relief), they'll continue slowly (then all at once) ending this discipline for you.

Retention: What Should I Do?

When I tell you to do something different to retain specific customers, I receive similar and common feedback:

"What do you want me to do differently? We email customers every day. We post on Facebook. We pay Google to snare our customers. We're on Amazon. We're everywhere!"

Oh come on. You do all the easy stuff. It is not hard to stick $0.60 into Google's trillion dollar bank account. It is easy to send eleven email campaigns per week featuring 40% off and 70% off clearance.

Your ESP provides software that allows you to separate any customer with recency = 8 months. Set those customers aside, and create specialized campaigns that override normal campaigns. Teach every customer getting ready to be "active" again what you're selling in three months. Create events for those customers ... three months out of course, but create the events regardless. Do some work! Educate the customers, prime the pump, create some excitement. Be exclusive, unique, differentiate yourself from the lemmings preparing to jump off of the Cyber Monday cliff.

Again ... your ESP provides you with software to perform customized Action Streams for any customer at any status in the Customer Life Stage. Use the tools you are already paying for.

Retention: When The Fish Are Biting

Here is one of my retention tables for a Home brand. The table illustrates incremental monthly rebuy rates. Tell me what you observe.

Did you miss it? Look at the row with twelve-months since a prior purchase. Heck, look at 10/11/12 months since a prior purchase. Those customers are MORE RESPONSIVE than are customers who bought 4/5/6/7/8/9 months ago.

This happens all the time ... run the table above for your brand and tell me what you see.

If you care about retention, and from your emails and messages on the socials it is clear you value retention a lot more than you value customer acquisition, why aren't you capitalizing on this window of opportunity? Why do you treat these people the same as you treat everybody else? Please, tell me the reason why you don't do anything different with seasonal buyers?