Retention Marketing Strategy for eCommerce: FMCG, CPG, Subscription and One-Time Purchase Brands

Introduction

There are several distinct types of eCommerce businesses, each requiring different approaches when it comes to retention marketing strategy (for the sake of our business, retention strategy = email/SMS/direct mail as channels). 

This is due to a variety of factors, including purchase latency, product-market fit status, cash reserves, and operational challenges and goals.

In this article, we’ll be discussing 4 variable scenarios for different types of DTC businesses:

1. Fast-moving consumer goods (FMCG) - i.e. cosmetics, toothpaste, supplements
2. Consumer Packaged Goods (CPG); Somewhere in between - i.e. fashion, apparel, entertainment
3. Subscription business - i.e. meal prep, deodorant delivery, prenatal products
4. 1-time purchase - i.e. mattress, sofa, furniture, wiper blades

While there is no one-size fits all approach for every business, when the right questions are proposed to the client and correct answers are elicited, there are formulaic frameworks I’ve found to be incredibly repeatable across the scope of these businesses.

This article will provide a framework for each type of DTC business you can use to create strategy from.

Work through each step sequentially and it’s almost impossible to go wrong with creating strategy and not course correcting.

One of the most important distinctions in this framework - and the one most likely to reset your expectations if you're working with the right type of brand - is the one-time purchase model. For brands selling mattresses, furniture, or other long-cycle products, the entire objective of retention marketing shifts. Repeat purchase rates become the wrong KPI to optimise for.

The focus moves instead to reducing CAC through referral generation, word-of-mouth advocacy, and using existing customer data to find new audiences that look like your best buyers. This is a fundamentally different job to the one retention teams are usually hired to do, and getting that framing right at the start of an engagement saves significant time and avoids the wrong strategy being built on top of an impossible goal.

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What do you need to understand before building a retention marketing strategy?

1. Why do business goals need to come before retention strategy?

What are they forecasting for the subsequent months and years ahead? This will determine your strategy in the short and long term.

2. How do your top-performing SKUs shape your retention strategy?

Use the 80/20 rule to see where your focus should be when it comes to strategy. Even with a large product assortment, you’ll usually see a trend for a very specific hero product(s) that generates the lion’s share of the revenue.

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There are also outliers that may crop up that we’ll cover in section 4.

3. Why do unit economics matter for retention marketing strategy?

Use this basic formula to understand profit per SKU using a simple calculator - client/brand should have this on hand so you understand levers you can pull and limitations on discounts in your strategy.

4. How do you benchmark retention performance before setting strategy?

Now you’ll need to go back to question 1 to find out where you’re currently at in regards to retention performance before deciding which strategy to pursue.

Depending on the business, it’s likely you’ll be looking at different things here. While everybody will want to increase profitable returning customer revenue and Lifetime Value, it’s important to go granular in order to set the strategy at the beginning.

It’s also critical at this stage to ask the client “what is your source of truth for measurement?”. For some, it’s Klaviyo. For others, it could be GA, Northbeam, Triple Whale, or simply Shopify. You don’t know if you don’t ask.

Let’s look at a few potential scenarios as well as our control over them:
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Scenario 1: “I want to increase returning customer revenue contribution from email/SMS/direct mail”

This is a generally easy report to benchmark from Shopify by looking over previous months/years (NOTE: you’ll need to go into GA or your attribution tool to get channel-specific contribution historically):

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You can also start to see areas for optimisation between first-time and returning customers using this view.

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While it doesn’t tell the full story of what’s going on in their business, you get an indication of the high-level business KPIs, assuming that you’ve asked the right questions in section 1.
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DON'T MISS: Influencing customer retention is harder than you think - cohort analysis

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Scenario 2: “I want to increase Customer Lifetime Value within a 90-day period”

This one is definitely getting into a grey area of whether or not it’s possible to achieve, as it’s subject to a lot of outside influence, but it’s still something collectively we can strive to support the organisation with.

First, the organisation needs to be clear on the measurement method - don’t try to provide our own abbreviation as this can be a metric that’s easily misconstrued. Get them to clarify how they’re measuring CLV.

Let’s say we’re using this basic cohort chart in Lifetimely as a benchmark:

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Ok, in this example, it’s clear it’s going to be challenging. The brand realises most LTV within the first order so our strategy to increase it within a 3-month period is going to be very challenging and require deep focus on which levers could make a difference.

Scenario 3: “I want to increase attributed revenue from Klaviyo/email/SMS”

This is a common request still, usually for brands that lack maturity and knowledge of how a DTC business operates. 

However, there are many businesses who still see this as a legitimate goal and insist on it to reduce their dependency on paid ads, although it is never usually a long-term solution and can lead to poor tactics to achieve the desired goal.

Just be aware of the conditions upon which you’re operating and be realistic with the client on the longevity of expected results.

Pro-tip: Are there products in your assortment that lead to an unusually high LTV?

If so, find out what they are and integrate them deeply where relevant into your strategy and even suggest the acquisition team experiments with these products at the top-of-the-funnel.

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NOTE: removing outliers/bundles to tidy up the data is key here

Before you decide which strategy to pursue, it helps to know what good actually looks like.

A 20-25% repeat purchase rate within 12 months is average for most DTC categories. Anything above 30% is strong. Most brands, regardless of category, lose between 60-80% of their customers on a monthly basis - and this is largely predicted by market share rather than the quality of the retention strategy in place.

This is not a number most brands want to hear. But it matters because it reframes what retention marketing can realistically achieve.

The job is to stay present during the gaps between purchases so that when a customer does re-enter a buying window, your brand is the default choice.

These benchmarks also vary by business model - a 25% repeat purchase rate is strong for a one-time purchase brand and weak for an FMCG brand. Context is everything.

‍DON'T MISS: Email is not the only sales channel for retention

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What levers does retention marketing actually control?

Let’s summarise what we know so far:

• You understand the business goals and KPIs
• You understand the top-performing SKUs the company is built around
• You understand the unit economics around these SKUs
• You’ve benchmarked where the business is currently at and created a target for where it needs to go

Now, it’s time to look at the levers we can pull for each business-type along with where our primary focus should go.

But first, what are these levers that we influence and how do they support growth?

• List growth: more qualified leads in the system = bigger audience to target
• Deliverability: better inbox placement = more eyeballs on your messages
• Returning customer traffic: more clicks going back to your website = more browsing sessions
• Average Order Value (AOV) / Contribution margin: customers spending more = better contribution margin

These are the prime factors that allow us to increase profitable revenue, customer lifetime value and purchase frequency. It is important to note that the end result of improving these metrics is to improve these core KPIs and all strategy focused around them is to lead to better business outcomes.

There are, of course, secondary goals which many businesses focus on, that are a core part of the Value Framework we obsess over at Magnet Monster:

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Now, it’s almost certain that you can and should try to optimise each lever simultaneously. However, depending on the type of business you’re operating, there will likely be different approaches you use to diagnose their issues in order to craft the best quality strategy. This section will focus explicitly around the nuances between these variables.

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What is the right retention marketing strategy for FMCG brands?

For FMCG brands, developing product stickiness is key. Customers need to extract utility from the products in order for repeat purchases to happen.

Think about it logically: why would you buy a product again that you don’t get value from? You wouldn’t, unless it was a gift for others.

The biggest lever retention marketers have for these brands is to train the customers to adopt the products to realise that second purchase. After this has been achieved, all subsequent offers, promotions and campaign concepts are more effective in driving LTV.

What is a good increase in LTV or repeat purchase rate? The short answer is it depends on numerous factors - you have to understand the business's unique unit economics and strategy. A general rule of thumb most look for is a 30% increase in LTV within 90 days of being acquired, or a 20-25% repeat purchase rate (anything above this is considered strong).

Here’s how I would dissect the data and craft a strategy for FMCG brands in a formulaic way that could be replicated across all verticals:

• Understand the hero product
• Benchmark repeat purchase rate within 30/60/90-day window (you can look beyond this, but realistically speaking, our chance to make an impact is in this window since email/SMS engagement plummets post-90 days)
• Analyse the median time between orders for repeat purchases (1st to 2nd purchase) - i.e. 28 days (consider how long the product is intended to last for - i.e. 30 vs 90 days as this will play a factor)
• If the repeat purchase rate is low, the instinct most retention teams have is to send more emails, increase discount depth, or add a winback flow. In my experience, that instinct is usually wrong.
  
  Low repeat purchase rates in FMCG brands are almost always a product adoption problem, not a communication problem. Customers bought once, didn't extract enough value from the product to feel compelled to repurchase, and quietly moved on. No subject line or discount code fixes that. What does fix it is understanding exactly why the product didn't stick.
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  This is where Jobs To Be Done (JTBD) qualitative research comes in. The framework asks a deceptively simple question: what job did the customer hire this product to do, and did it do that job well enough?
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  In practice, this means conducting short interviews with customers who repurchased and customers who didn't, and comparing the answers. What you typically find is that the customers who repurchased understood how to use the product correctly and experienced a specific, tangible result. The customers who didn't repurchase either had unrealistic expectations set at the acquisition stage, didn't use the product consistently enough to feel the benefit, or encountered a friction point in the first 2 weeks that nobody followed up on. Use the answers from this survey to improve acquisition efforts (hooks/angles in creatives), product formulation and customer journey mapping.
  
  I would now optimise relentlessly around ensuring customers adopt the product, build habit formation and extract the main value proposition they came in for at the top-of-the-funnel (i.e. improving acne from a skincare product).
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  Optimise for repeat purchases with strategic cross-sells and replenishments around the median time between orders.

Once you’ve created a strategy and implemented it around the above, benchmark performance from cohorts and analyse them again after a 90-day period to see its impact on core KPIs. Iterate accordingly.

Of course, you can continue to send campaigns to these customers along with setting up your usual flows to increase returning customer revenue but remember that if retention issues are present in the business, you first need to dissect why and then create a strategy around ensuring the qualitative insights are remedied.

DON'T MISS: Build your retention channels in parallel to increase CLV

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How does retention marketing strategy differ for CPG brands?

A lot of the above is equally as applicable here for CPG products that aren’t classed as essential.

For these brands, seasonality is often key as well as the product assortment being refreshed and consistent, leading to a high velocity of campaigns to keep customers “fresh”.

So while the above formulaic approach from FMCG would still be relevant, there may be less emphasis on habit formation and more on “what else is new”.

For example: you’re a fashion brand selling women’s apparel. Your customer has just bought a dress, but they haven’t yet seen handbags or accessories that may compliment your outfit.

There isn’t too much extra to add in this section that isn’t covered above.

Pro tip: have a high LTV product you’ve discovered that was covered in section 4? Make this prominent in your post-purchase marketing for these brands!

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What is the retention marketing strategy for subscription eCommerce brands?

If you’re managing an exclusive subscription business, this chart is where you need to focus all of your attention:

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You want to immediately focus on where the drop-off is happening; this is your main point of leverage for driving incremental value.

For most subscription brands, the critical drop-off happens between month one and month two. Brands that lose more than 50% of subscribers before their second order - which is common - need to focus almost entirely on the first 30-45 days before any other retention strategy will move the needle.

If the store has multiple SKUs, you also want to drill down into cohort-specific SKU retention to find out which products yield a high revenue per user (ARPU by SKU in the table below - not the best example but you get the point):

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Let’s analyse a formulaic way to tackle subscription businesses to maximise retention:

1. Find the hero product(s)
2. Benchmark retention over a 12-month period and LTV
3. Analyse the drop-off point to find your biggest point of leverage (in the example above, it’s clearly month 2)
4. Drill down into why customers cancel (most subscription software provides you with these cancellation reasons)
5. Create automation designed to overcome these objections and ensure that the product is sold effectively at the top-of-the-funnel to attract the best subscribers with highest LTV potential
6. Create automation that helps drive reactivations based on overcoming objections
7. Frequently target customers with campaigns to win their business back based on cancellation reasons
8. Explore if there are any reward mechanisms (i.e. 4th order is free after 3 subscriptions) to improve product retention
9. Cross-sell where appropriate to drive multiple subscriptions

What if the brand is a FMCG that has both one-time purchase and subscription in their checkout?

In this scenario, it’s best to analyse the data pragmatically to see what the opportunities are. If 90% of customers make single purchasers, then it doesn’t make sense to obsess over excessive planning on the brand's subscription model, unless their goal was to specifically phase out one-time purchase options in order to move towards an exclusive subscription model.

If it’s closer to an even split, then it may make sense to proactively push single-time buyers onto the subscription model, especially for repeat purchasers. In this scenario, it’s best to blend together strategies from the FMCG section alongside this one, analysing where the biggest potential is for incremental revenue gains.

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How should one-time purchase brands approach retention marketing?

For stores that sell items that are typically purchased once, the impact of our work as retention marketers needs to shift focus.

Without a consistently reliable source of returning customer revenue, we need to reanalyse the objectives post-purchase and manage our expectations of what is possible.

Here’s a simple cohort chart that illustrates the issue for a brand with product-market fit on where their priorities should lie.

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What you see here is fairly obvious: we need to take a long-term view to engaging these customers as the purchase lifecycle can be much more prolonged, with repeat sales coming sometimes much further in the future after the first order (consider the impact of segmentation here in your strategy).

This guide provides a strong starting point of where to focus with these stores, and to summarise the steps:

1. Maximise profits on first order: don’t erode margin too much on pop-ups; look to increase contribution margin with minimum order thresholds if you’re giving away a discount
2. Focus the post-purchase journey on lowering CAC: if you can’t drive repeat sales, focus on how to generate Word of Mouth advocacy by creating an exceptional experience that will create viral loops and bring in new audiences
3. Create a powerful referral program: be generous with the incentives
4. Release complimentary products: this is one of the only true ways for these brands to move the needle on retention

Overall, your focus for these stores should be utilising the existing customer data to help discover new audiences, since acquisition is their primary focus.

A slower campaign cadence may be advisable, and expectations with the brand should be managed appropriately as to what type of impact email & SMS marketing can have on growing their revenue.

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DON'T MISS: Loyalty programs are no retention shortcut

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How should you report on retention marketing performance?

When it comes to reporting, I like to look at things on a quarterly basis in order to gauge the true impact of our strategy.

Email/SMS-specific metrics can be analysed on a daily, weekly and monthly basis, but the impact on overarching KPIs like repeat purchase rates and Customer Lifetime Value often take time to gauge the impact of strategy. A good middle ground is often returning customer revenue, which can and should be monitored daily by most CMOs.

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Concluding Thoughts

Let’s wrap up what we’ve learnt about eCommerce and how we should approach strategy different for each business in sequential steps:

1. Understand business goals and client expectations/KPIs
2. Analyse top-performing SKUs (80/20 rule)
3. Calculate the unit economics
4. Benchmark existing performance (i.e. cohorts, LTV, returning customer revenue)
5. Decide which levers to pull (i.e. AOV, list growth, inbox placement, returning customer traffic, etc)
6. Create strategy for 90-day period
7. Report on results from lever pulling and their impact on brand KPIs – iterate accordingly, starting at the beginning every 90 days

If you follow this formula to the tee, you’ll have indefinite room for optimisation with your strategy.

And don’t forget the caveat to all of this working consistently and effectively before we sign off: we need to work in harmony and have a steady supply of consistent (and preferably, growing) traffic. Without it, all our efforts will be limited.

Feed the ecosystem and watch things prosper.

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FAQs with answers

Does the same retention marketing strategy work across all eCommerce business types?

No, and applying the same playbook regardless of business model is one of the most expensive mistakes a retention team can make. The purchase latency for a supplement brand is 30-45 days. For a mattress brand it could be ten years. The levers available to you, the flows that matter most, the campaign cadence that makes sense, and the KPIs worth tracking are all fundamentally different across FMCG, CPG, subscription, and one-time purchase models. Strategy has to start with business model, not with channel tactics.

What is a good repeat purchase rate for an eCommerce brand?

A 20-25% repeat purchase rate within 12 months is considered average for most DTC categories. Anything above 30% is strong. The honest reality is that most brands lose between 60-80% of their customers on a monthly basis regardless of how good their retention marketing is.

This is the natural behaviour of buyers in most categories, consistent with what the Ehrenberg-Bass Institute has documented about buyer moderation over time. The job of retention marketing is to stay present during those gaps so that when a customer does re-enter a buying window, your brand is the default choice.

How do you build a retention strategy for a subscription eCommerce brand?

Start by finding where the drop-off is happening. For most subscription brands, the critical leverage point is between the first and second order - brands that lose more than 50% of subscribers before month two need to fix that window before anything else.

Analyse your cancellation reasons directly from your subscription platform, then build automation specifically designed to overcome those objections. The post-purchase flow in the first 30 days should focus entirely on product education, habit formation, and demonstrating the value proposition the customer signed up for. Revenue-focused campaigns to active subscribers can come later - but only once the product is doing its job.

What should one-time purchase brands focus on with email and SMS?

Not repeat purchase rates. For brands selling mattresses, sofas, or other long-cycle products, expecting email to drive significant returning customer revenue is setting the wrong goal entirely.

The better objectives are reducing CAC by generating referrals and word-of-mouth from existing customers, building the kind of post-purchase experience that creates genuine brand advocacy, and using your existing customer data to identify acquisition audiences that look like your highest-LTV buyers. The email and SMS strategy for these brands is ultimately in service of acquisition, not retention in the traditional sense.

How long does it take for retention marketing strategy to show results?

Email and SMS metrics can be monitored daily and weekly. But the impact on the KPIs that actually matter - repeat purchase rate, customer lifetime value, and returning customer revenue contribution - typically takes 90 days to measure meaningfully.

This is why reporting on a quarterly basis rather than monthly is more honest and more useful. Short-term spikes in Klaviyo attributed revenue after a discount campaign are not a signal of strategic progress. Cohort-level improvements in LTV over a 90-day window are.

What is the JTBD framework and why do retention marketers use it?

Jobs To Be Done is a research framework that asks customers what problem they hired your product to solve, rather than what features they like. For retention marketers, it's most valuable when repeat purchase rates are lower than expected.

Running JTBD interviews with customers who did repurchase versus those who didn't reveals whether the gap is a product problem, a messaging problem, or an expectation problem set at acquisition. The answers directly inform not just the retention email strategy but also the acquisition creative angles, which is why at Magnet Monster we treat qualitative research as a retention lever, not just a product development tool.

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