#5 The Bestseller

Hi DTC folks,

This week we talk about your bestselling products. How do you create bestsellers, how do you find new bestsellers, and how can your bestselling products influence your repurchase rate?

Let's go.

Featured: Creating a New Bestseller

Many of you know the situation.

Your brand relies on 1 or 2 true bestsellers to attract new customers.

At the same time, almost every attempt to establish a new product fails

But why is this?

The main reason is self-fulfilling prophecies.

You create an uneven playing field between your products, never really giving new products or hidden champions a chance to replace the best-selling product.

1) Bestsellers get prominent placement in the store.

They are usually placed higher in the listings and get features on the home page and more cross-sellings because they are naturally part of more orders. It's like a vicious cycle.

2) Meta and other advertising channels favor historical bestsellers

Most of the time, new ads and products hardly get any reach within the same ad group because meta favors the old winners. In addition, ad channels always focus on conversion at the cheapest price, neglecting return rates, repeat purchase rates, profits and ultimately LTV.

3) Customer priming

Customers often associate the old best-seller with your brand. Your brand is often synonymous with the product.

Your previous marketing investment also leads to a higher conversion rate for that product. If you've ever talked about "branding effects," this is a prime example. Customers may have seen this product 95% of the time when they saw one of your ads, because you've spent 95% of your ad budget on it.

How bestsellers are usually made

But how did you create your current bestseller?

When you originally found your bestseller, you usually had a level playing field, and the product that attracted the most customers was the winner.

Since people are primed, this situation can no longer be restored.

How to solve the problem

1. We need to look at metrics beyond the immediate sales numbers. These are primarily qualitative metrics. We know that good repeat purchase rates, high post-purchase repurchase rates, and high first purchase AOVs are strong indicators of product quality and customer loyalty. These are the core metrics you need to track in RetentionX.

2. You need to invest to level the playing field. Isolated marketing tests where new products are not in direct competition may not have the same CAC performance initially, but will outperform on the metrics in 1.

3. Gradual scaling. If 1. and 2. are successful, the next step is to continue to expand products and product lines. Allocate a percentage of the marketing budget to the new products and, most importantly, give them time.

Too many marketing teams & agencies have very short-term goals (path of minimal resistance) for your brand and want to generate maximum revenue now.

Unfortunately, this results in your brand not being able to evolve.

At some point, you'll wonder what happened to make things not work the way they used to.

The answer is usually a lack of evolution of the brand and it's customer journey.

How Bestsellers Hurt Repurchase Rates

Many brands will find this hard to believe, but the most common reason I see for low repeat purchase rates is not lack of remarketing, poor email flow, or customer dissatisfaction with their order.

The most common problem especially for more mature brands is a lack of pricing strategy in bestseller positioning.

What does that mean?

The bestseller is the product most often used for customer acquisition.

However, very few brands look at where the product sits in the overall price structure.

Often, the bestseller is significantly less expensive than the core of the product portfolio.

Loss Leaders

Many brands make the mistake of thinking that loss leaders are the way to low customer acquisition costs.

But this is usually a big mistake.

They only look at the short term CAC improvements and neglect the LTV impact.

But when you segment the customers, you usually see disastrous retention metrics for the loss leaders. What you save at the front you lose twice at the back.

Targeting loss leaders with email marketing is also much less effective than targeting those who are willing to pay.

However, this observation cannot be applied to selling samples. Many brands see good results with this strategy because there is a big difference: The customer knows what price point to expect next.

Dos & Don'ts

Ideally, the bestseller should be around the median of the product portfolio.

In this way, you attract customers who are already willing to pay the average price of the brand's products.

A "hack" for higher retention is to price it even higher than the median...

Bad examples of bestseller pricing can be found especially in the premium and luxury segments.

If the bestseller is the cheapest product, it is often at the upper end of many customers' purchasing power. They can barely afford the product.

As a result, repeat purchases become impossible, no matter how much they like the brand.

A large part of the marketing budget is usually spent on promoting the best-seller. Therefore, it is important to match the bestseller to the ICP (ideal customer profile).

If my target audience is in the $500-$700 price range for a sweater, I shouldn't try to entice them with a $50 bestseller T-shirt. Not only does this attract the wrong customers, but it makes the customer journey nearly impossible to navigate.

You are diluting your customer database with customers who are no longer playable, which often leads to the wrong decisions for your core business.

Final Thoughts

A key question should be:

"Which customer group within my brand is the revenue and profit driver, is it also my ICP, and is my product strategy, including the bestseller, aligned with it?"

This is where RetentionX can help.

Make sure you can create a product journey for the customer that extends beyond the initial purchase.

Industry News

🫧 Indian mega-influencer Mira Kapoor unveils debut skincare brand Akind

Indian mega-influencer Mira Kapoor enters the beauty industry with her skincare brand Akind Beauty, joining the growing list of celebrity beauty brands. All products have been developed in partnership with local beauty retailer Tira Beauty.

🍺 Kelce brothers become co-owners of beer brand Garage Beer

NFL brothers Travis Kelce and Jason Kelce are getting into the beer business. They have acquired stakes in the light beer brand Garage Beer, becoming the major investors in one of the fastest-growing beer brands in the U.S. The brothers will be involved in all aspects of the business, including brewing, distribution, sales, marketing, and national expansion efforts.

🪷 Rihanna gets into hair care with her new brand Fenty Hair

Billionaire pop star and visionary behind the Fenty Beauty brand, Rihanna is ready for her next venture. After launching Fenty Beauty in 2017, the brand has grown by leaps and bounds through a strategy of diversification. In 2020, the label added Fenty Skin, followed by Fenty Fragrance a year later. Now, Rihanna is launching the haircare line Fenty Hair.

🧃 L.A. Libations launches BFY soda brand Rad Soda

Next-generation beverage incubator L.A. Libations has launched a new player in the better-for-you (BFY) beverage category: soda brand Rad Soda. Rad Soda embraces nostalgic branding and classic flavors, while aiming to offer a healthier alternative to existing options.

🏃 Activewear brand Outdoor Voices has been acquired

Investment firm Consortium Brand Partners acquired athleisure brand Outdoor Voices for an undisclosed sum. The acquisition follows reports that the brand was facing potential bankruptcy. Despite restructuring efforts, including closing all retail stores and shifting to e-commerce, Outdoor Voices continued to struggle. The new owner has cleared all debt and is embarking on a multi-year turnaround plan.

🥊 Boxer and digital creator Jake Paul launches men's care brand W

In the midst of training for his fight against Mike Tyson, digital creator and boxer Jake Paul is expanding his career by launching a beauty brand: W. The brand offers a collection of deodorants, body spray and body wash - targeting young men struggling with confidence and self-esteem.

That’s it for this week!

Any questions or topics you'd like to see me cover in the future? Just shoot me a DM or an email!

Cheers,

Alex

P.S.: Don't forget to check this out 👇

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