Retention: Your 2025 Growth Lever

If you’re still treating retention like an afterthought, you’re in for a brutal year.

Acquisition is more expensive than ever. Everybody knows this.

Meta & Google CPMs are climbing. Tracking is a mess. Brands that don’t adapt will struggle.

And yet most brands are still stuck in an outdated playbook, pouring cash into ads without a clear plan to turn customers into repeat buyers.

That stops now.

Retention isn’t a "nice-to-have". It’s the difference between a sustainable business and one that’s burning cash to stay afloat.

Here’s why smart brands will win 2025 by making retention their #1 priority 👇

🚀 Three reasons retention should be your core focus in 2025

1. High retention = lower CAC (the secret to sustainable scaling)

• Fact: Returning customers drive 3-5x higher conversion rates than new customers

• Another Fact: Acquiring a new customer is 5-7x more expensive than keeping an existing one​.

Meta, Google, and other paid channels are getting more competitive, and more expensive.

Privacy updates and data tracking challenges make it harder to attribute sales and retarget.

Retention offsets this.

The cost to acquire a new customer is significantly more than selling to a repeat customer; and existing customers spend more than new customers.

See where this is going?

More repeat buyers = lower overall CAC.

You can afford to spend aggressively on new customer acquisition because you’re extracting more value per customer over time.

Low retention and low LTV means you live and die by the profit made on your first order.

2. Retention is a hedge against uncertainty

Market swings? Platform changes? Ad costs surging?

All of this matters less when your customers stick around.

• Brands with strong repeat purchase rates don’t panic when Facebook’s algorithm shifts.

• They don’t scramble when ad costs spike.

• They have a predictable revenue engine that lets them make long-term decisions with confidence.

In times of uncertainty, customers stick with what they know - brands they’ve bought from before, where they know what they’re getting.

This makes you less reliant on external forces, and able to make long-term decisions knowing you have an engaged audience to sell to at any time.

A high-retention business is a resilient business.

3. Retention gives you the freedom to swing big

Want to take bets on high-growth initiatives? TikTok Shops? Influencer marketing? Bold new product line?

The best brands take strategic risks. But they can only do this if they have a stable foundation of repeat revenue to fall back on.

No growth channel is a sure bet:

A creator might charge you $10K+ for a video. It might flop.

A new product launch could tank. That’s OK.

But if you have thousands of loyal customers who buy regularly, one failed test won’t kill your margins.

You need to take bets on high-risk, high-upside channels to grow, but you need to know you’re going to be ok if the bet doesn’t pay off.

Retention gives you optionality. You can play the long game without sweating short-term volatility.

🔥How to win at retention in 2025

Make the customer experience unforgettable

"Delight" isn’t just a buzzword.

A frictionless experience from homepage to post-purchase is what keeps people coming back.

Delight your customers. Roll out the red carpet - from the initial experience when they land on your site, to navigating, getting questions answered, and up to (and beyond) the post-purchase experience.

Go hard on human connection

As AI floods the market, people will crave human interaction more than ever.

It’s funny - as the human cost in businesses decreases, the need for a human face on your business goes up.

Make sure your brand feels real. Human.

Put real faces out there. Make use of UGC as much as possible.

Dr Squatch and Glossier are two examples of the value of humanizing your brand.

This is how to get your audience to remember you, and keep your customers coming back after their first purchase.

Invest in high-retention, owned channels (email, SMS, apps, push notifications)

Direct more or your energy and resources into building channels you own, and which contribute to high retention.

• Email is table stakes. It’s not dead — less effective maybe, but the ROI is still worth it.

• SMS works great for high-urgency situations, though gets expensive at scale.

• Mobile apps and push notifications are your silver bullet. Wildly underutilized, and the perfect channel for retention.

Each of these channels gives you a direct, cost-efficient line of communication with your customers that no algorithm can take away from you.

And the beauty is that, after the initial legwork to set up, these channels can run on autopilot.

Automated email, SMS and push campaigns drive engagement with little to no upkeep required.

While your mobile app offers a frictionless way for your best customers to come back and buy from your regularly.

Don’t have a mobile app yet?

Hit the button below 👇 to see how to launch your own app in less than 30 days.

Focus high-retention customer segments

Think about it.

Getting a customer with low brand engagement to convert again can be a huge time and resource investment.

While these customers are important to your business, they require a lot more effort to retain.

They’re just not in love with your brand the way you’d like them to be.

You need to spend more on marketing and get increasingly creative with your strategies to convince them to make another purchase.

Instead, your job becomes much more straightforward if you focus on customers who show early signs of brand loyalty.

These customers are already receptive to your message and more likely to engage with your brand naturally.

Of course, there's nuance here — you need a healthy mix of both customer types for sustainable growth.

But strategically choosing to invest more resources where you're already seeing strong engagement is often the smarter path to growth.

Don’t just chase sales. Build your brand

Retention comes from brand recognition.

It’s when your brand becomes the go-to option, because customers have seen you everywhere.

95% of your target audience are not ready to buy right now.

Your marketing campaigns shouldn’t blindly target the 5% who are in-market. They should also nurture and build a connection with the 95%.

Run campaigns to build your brand.

Get multiple touchpoints out there. Get in front of your audience on multiple channels.

Be memorable.

Track and monitor retention metrics

As the saying goes, what gets measured gets managed.

So measure and track key metrics related to retention.

• LTV

• Return customer rate

• Purchase frequency

Track it, and there’s a much better chance you’ll see it grow.

❌ The retention mistake most brands make

Be careful of falling into the trap of chasing retention at all costs.

Yes, retention is crucial. But it only works if you can actually afford to acquire new customers in the first place.

First-order profitability still matters.

You need to make enough back on your first sale to keep your business running.

If it takes years to recoup acquisition costs, there’s a good chance your business won’t be around long enough to see your profit realized.

Maintaining short-term profitability while increasing LTV is the holy grail.

So your takeaway should not be to go all in on LTV, even if it means massive losses on your first sale.

But, if you do retention marketing right, you shouldn’t have to weather first-order losses.

Retention marketing and owned channels are naturally low-cost.

Email is super cheap.

Building a more human customer experience won’t put a dent in your cash flow.

And the ROI of launching your own app and sending push notifications is better than it’s ever been.

Building a retention-focused brand will make your business more sustainable, and won’t cost you the world.

Quick Hits

Check out some of the most valuable content we’ve found from around the ecom world this week.

Predictions: Ecommerce Trends for 2025

We made ten predictions for trends we think will dominate ecommerce in 2025.

These include AI (of course), humans, and more brands following the path of Shein and Temu when it comes to customer experience.

Read more →

What trends are you betting on for 2025? Reply to this email and let us know!

More 2025 Predictions

Rabah Rahil (Fermat, formerly Triple Whale) weighs in with two of his own trend predictions for this year.

Like us, he’s anticipating both AI and the human touch to be key factors for brands in 2025.

Read more →

Boohoo Group Breakdown & Revival Plan

In Jeremy Horowitz’s excellent Let’s Buy a Biz! Newsletter, he puts British fast fashion portfolio company Boohoo Group under the microscope.

Spoiler alert: their financials aren’t looking too good.

Jeremy gives an incredible breakdown of their problems and his plan to bring the company back from the dead.

Read more →

How to Turn Brand Marketing from Bull Sh*t to Holy Sh*t

(not my title btw)

Preston Rutherford, Cofounder at Chubbies, shares five ideas that turned him around on the idea of brand marketing.

A few highlights:

• The 95/5 rule (which we touched on earlier). Only 5% of buyers are in-market to buy right now. Focus on the other 95%.

• Objective data suggests a 60/40 split between brand building and conversion-focused marketing is ideal.

• It IS possible to measure the financial impact of brand marketing.

• Certain digital behaviors, such as share of search, predict future sales (and quantify the impact of brand marketing).

The post includes links to high-quality resources supporting each idea, giving you all you need to dive into each point.

Highly suggest checking it out!

Read more →

To sum up what we’ve touched on today, focusing on retention isn’t just a smart strategy. We’d say it’s essential for navigating today’s unpredictable market.

By nurturing a loyal customer base, only offset rising acquisition costs, and at the same time build a resilient brand that can take calculated risks for future growth.

Hit reply 📧 with any novel retention tactics you’re trying this year, or any thoughts you have in general.

We read every reply, and we love to hear what our audience has to say.

Oh, and one more thing, before you go.

Keep an eye on RetentionEdge.co for the first edition of our brand new podcast, kicking off very soon.

We’ll be sitting down every week with the people shaping great customer experiences in ecommerce and retail.

From marketers and CX professionals to merchandisers and designers, we're going direct to the source to bring you inside info on the strategies and ideas that keep customers engaged and coming back.

We’re super excited to bring this to you. Stay tuned in the coming weeks for episode #1.

Until next time!

Pietro and The Retention Edge Team

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