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The Transition from Acquisition to Retention – It’s Do or Die

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eCommerce Strategy

The Changing eCommerce Universe

New eCommerce platforms like Shopify have drastically lowered the bar when trying to become a successful eCommerce company. As a result we will see an increasing amount of fragmentation and a reduction in the amount of mass appeal brands. For example, let’s pretend 5 years ago there was a small custom suit website called Indoseamo. Lets say they find early success having customers perform their own measurements, send them in, and receive a custom suit at surprisingly low prices. They can do this, because they have no retail locations, and minimal overhead. Indoseamo sees huge success since only a hand full of other players can afford to spend 30k building a robust ecommerce platform to replicate this model.

Let’s instead imagine a world where Indoseemo is started today, using Shopify and never existed before. They launch their disruptive idea and eCommerce website spending less than $500 and see immediate traction. Within months we would see replica stores offering custom suits made with sustainably sourced materials, a custom suit site for those overweight, a custom suit site with only flashy, colourful patterns, and you see where i’m going with this. Shopify is doing to eCommerce what YouTube did to finding musical talent, breaking down barriers and it’s great, but that means a very different way of running your eCommerce business.

Content vs. Context


So based on that, what is the secret to re-creating these berriers to entry, growing your brand, and building a successful marketing strategy? Spend more than Indoseamo on advertising and create more content than their small team can pump out? Nope.

We’re past the era of blowing your entire marketing budget on ads then blasting the same message to everyone. According to Google CEO Larry Page, every two days the world creates as much content as we did from the dawn of civilization to 2003. Think about the hundreds of millions of newspaper articles and books published around the world, the radio hours broadcasted over a span of 2003 years, yup, we create that every 2 days. You can wear the nicest white shirt to an all white party but if you think people are going walk up and say where did you get that, your white shirt business is in for a rough ride. In a sea of content it’s all about context.

Related: A Guide to Growth Hacking for Ecommerce Merchants

So What Do We Do?

Over the past 10 years or so, there has been a slow, long tailed transition in marketing spend from a customer acquisition focus to a balanced approach including customer retention. At the beginning there were blanket discounts, plastic cards, and birthday clubs but now Canada is catching up to its southern neighbours and organizations are truly starting to get it. They realize retention and CRM is an approach where the customer is truly understood, far more so than a new customer.

The business collects and uses data to build a relationship that means something to the customer and the company. Why doesn’t everyone do this? Retention isn’t glamorous, you can’t show hockey stick customer growth in a quarterly presentation. Acquisition is expensive, immediate and sexy on a chart.

The probability of converting an expensive new customer is only 5 – 20%.
Repeat customers spend 33% more than new customers, but again retention is slower moving.

It takes patience, but when those results come in, they’re jaw dropping, ROI rich, and that’s promotion fuel. Traditionally we’ve seen 70-80% of marketing budgets allocated towards customer acquisition and the remainder, left for retention, went to the programs mentioned above and/or customer support centres.

Manta BIA/Kelsey Study found this year in America, 62% of retailers now spend the majority of their marketing budget to retain customers. Furthermore, according to the Gartner Group, 80% of your future profits will come from just 20% of your existing customers. That’s great news!

It’s time for marketers to start looking under their noses and begin building programs for the thousands of customers they already own and know very little about. 

Even better, if retention is done right, it converts into free acquisition with a well planned referral program e.g. Refer a friend and you both get $5 off your next order. An industry changing shift is on the horizon and thanks to technology, the rate of the shift is going to hockey stick over the next 4-6 quarters.


At Demac we genuinely believe there has never been a better time to get into eCommerce or scale your existing business to the next level. The technology is all around us and cheaper than ever. Instead or worrying about low berries for others starting a website just like yours, build new barriers! The following are a few tricks out of the playbook we’ve put into motion for our clients.

Related: Toronto’s Tech Scene and the Growth of eCommerce in Canada

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