AI, startup hacks, and engineering miracles from your friends at Faraday

Customer retention requires data-driven predictions

Customer acquisition is a large focus for nearly every brand, and while this is important to driving growth (especially for early-stage companies), there comes a point when return on ad spend plateaus. To scale revenue and drive profitability, companies need to shift their focus to improving retention rates and increasing the average lifetime value of their customers.

After all, acquiring a new customer can cost five times more than retaining an existing customer. On top of that, approximately 80% of your future revenue will come from only 20% of your existing customers — so how can you find more of that 20% and further engage them?

Focus ad spend on high-LTV audiences

An effective retention strategy is inextricably linked to a strong acquisition strategy. If you can acquire customers from the get-go who are highly likely to come back repeatedly, you’re extending the reach of your marketing dollars far beyond that first purchase.

One way to identify leads and prospects who are likely to become high-LTV, loyal customers is to analyze what your existing loyal customers look like. Perhaps loyalty hinges on how often someone purchases or how much they spend; but if you dig a little deeper leveraging third-party data with your proprietary data sets, you might uncover even more telling details that serve as indicators of LTV.

From there, you can generate and target high-LTV lookalike audiences to increase the likelihood that those new customers are on track to become your next loyal customers.

Get ahead of churn-prone customers

Churn is a challenge for many brands that rely on repeat purchases to drive revenue. Luckily, the democratization of machine learning has made it easier to predict churn.

In fact, improving your retention rate by just 2% is the equivalent of cutting costs by 10%. This is because retaining existing customers is much more cost-effective than spending time and money on strategies to acquire new customers or to reactivate lost ones. So if you can accurately predict and then prevent churn by getting in front of risky customers before you lose their business, you'll be doing yourself a long-term financial favor.

When it comes to making accurate predictions about which of your customers is churn-prone, rich and informative data is key. Faraday uses machine learning models to find patterns and similarities between those customer sets in order to identify churn-prone customers. As your customer base grows, reiterating these analyses can prove helpful, as you might see shifts in behaviors and overall profiles as time goes on.

But knowing who is likely to churn is useless if you don't have a plan to act on that information. Those predictions need to be easily accessible in your ESP to segment your risky customers and put engaging promotions in front of them.


Churn modeling case study

Invest in personalized engagement tactics

Understanding and catering to your churn-prone customers is a financial investment, but investing the time and money into analyzing and personalizing your methods of engagement — and improving them by even 5% — can increase your company's profitability upwards of 25% and save you money in the process.

But it's not just the risky customers you should be concerned with when it comes to personalizing marketing creative. 89% of companies believe that customer experience is a key factor in driving loyalty and retention — giving your other prospects and buyers the same amount of attention helps to build trust and loyalty from the very start.

Personas are a great place to start when you're beginning to personalize your creative for various audience segments and customer groups. They can be high-level and just based on transactional history, or you can flesh them out with additional consumer data to create richer profiles to work from. Either way, providing more relevance in your communications with your customers shows your target audiences that you're putting effort into aligning with their interests, values, and motivations — ultimately building trust.

The loyalty that results from personalized customer experiences directly translates to the probability of a customer referring a friend to your brand. Neilson reports that 92% of consumers trust word-of-mouth referrals over all other types of advertisements, making loyalty programs and referral perks an incredibly valuable marketing opportunity (and a tactic many successful brands rely on).



Learn how Faraday helps brands maximize customer value by putting data science to work.



Four ways to extend your acquisition spend with data science

Acquiring customers who are enthusiastic about your brand and will support you in the long run is vital to establishing the scalability and longevity of your business. As the first step of building out a loyal customer base, customer acquisition is a high priority for marketing teams.

This article explores four ways you can leverage data science to extend your acquisition spend further to build a loyal customer base.

1) Build high-LTV lookalike audiences

The fact that it costs more to acquire new customers than it does to retain existing ones is no secret, which makes finding high-LTV prospects paramount to ensuring a successful, cost-effective acquisition strategy that will fuel future revenue.

Knowing your target audience is a key piece of acquiring valuable customers from the get-go. What makes your best existing customers unique? What draws them to your brand and/or products? Defining and identifying high-LTV customers is the first step in predicting who out there will become a valuable customer.

Predictive analytics play a crucial role in identifying traits and patterns in your customer data that are indicative of high-value customers. Of course, the depth and breadth of your customer data affects how accurate these predictions will be. Introducing third-party data is a great way to gain deeper insights, fuel your predictions, and generate higher-performing lookalike audiences.

2) Target lookalike audiences across multiple channels

Acquisition campaigns are most effective when orchestrated across multiple channels. Reaching likely buyers with consistent messaging through paid social, direct mail, and other targeted channels helps reinforce your brand in their minds and gives them more opportunities to engage.

To reach the same consumers across online and offline channels, you can't rely on anonymized audiences. Instead, you'll need a secure way of building known-identity audiences bolstered by third-party data. Faraday's predictive targeting tools let you rest easy knowing that the people seeing your ads are the leads you truly want to get in front of.

3) Optimize your channel mix with known-identity attribution

A diversified marketing mix allows you to reach varying demographics across different online and offline channels. But the sheer scale of marketing across numerous platforms doesn’t guarantee a high conversion rate or substantial ROI, so knowing where your money is best spent should be a high priority.

Equip your team with the capabilities to closely monitor campaign performance across each channel so you can identify what is working and what isn’t. It’s worth noting that this can be a difficult task with cross-channel campaigns, as several digital channels provide anonymized or aggregated results.

There are several attribution models out there, but we've found that known-identity attribution can provide you with a better understanding of who you should be targeting on each channel. Acquisition spend is precious, and having the ability to — and being excited about — shifting gears to improve your strategy is crucial. Marketing strategies should not be fixed; they should evolve as your customer base grows and changes.

4) Deliver smarter promotions and discount offers

Some consumers need a bigger push than others to convert — this is where promotions and discounts come in. But to protect ROI on your campaigns, it's important to predict which customers are will stay engaged after that initial purchase. Delivering a 15% discount to all consumer might help drive conversions and reduce your average cost-per-acquisition, but if they don't come back, you might find yourself in a tough spot down the road.

Similarly, not all consumers need a discount to nudge them along the path to conversion. Using predictive analytics to determine who should receive a discount and how big that discount should be can help you beat cost benchmarks and increase the overall return on your acquisition spend.

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Strengthening customer relationships during times of economic uncertainty

During times of economic uncertainty, consumer spending inevitably slows. While most companies feel the direct impact, these changes in behavior can present new opportunities for brands to strengthen relationships with their existing customers, and forge new ones by understanding how their brand, products, or services can bring comfort and reassurance to consumers in need.

reaching audiences illustration

In these turbulant times, none of us have all the answers. But we believe it's just as important as ever to lean into fundamental marketing principals when thinking of solutions to these new and unexpected challenges. We've put together a few thoughts that might help you nurture meaningful connections with your customers and find ways to continue to grow your brand.

Reflect consumers' motivations in your messaging

Consumers are viewing their buying patterns from a strategic point of view. The transactions they're making right now are likely related to health and wellness, nutrition, home essentials, and entertainment. These purchases probably aren't frivolous — they serve a purpose.

Consumers most likely want to add value to their lives now that they're cooped up at home. Ask yourself: How does your brand and messaging bring comfort into your customer's home? How does it help with potential cabin fever? Does it keep them comfortable? Busy? Intellectually stimulated? Take some things off their to-do list around the house? Ease their financial situation?

Consider the answers to these questions and incorporate them into your engagement initiatives. Your messaging should be empathetic and show that your brand recognizes why a consumer's purchasing behavior may be changing during this crisis.

A report published by the 4A's looked at the reception of brands' messaging around the coronavirus, finding that younger generations resonate with messaging that focuses on how the brand is supporting its community, while older generations are more interested in ads that speak to how the brand is keeping its customers safe.

Monitor changes in your customer base

Understanding how your customer base is evolving is critical to making sure your messaging continues to resonate with them, and enables you to make smarter decisions about where you should allocate your resources. This is particularly appropriate now as consumers turn to e-commerce to fulfill their shopping needs and brands try to optimize ad spend, messaging, and discounting strategies for both new and existing customer groups.

While this tactic will help short term sales and keep businesses going through what will be a financially challenging time for many, it's important to continue to track changes in your customer base to help meet long term sales goals. Forbes interviewed Kathy Bachmann, GM of Americas with the consultancy Analytic Partners Inc., and on the topic of what businesses can do to adjust plans for long-term projections she noted, “Some expect that consumers may not return exactly to their prior habits when the outbreak has passed … We recommend leveraging advanced analytics to support decisioning and reduce risk that can be run against a number of possible scenarios.”

Consider the systems your team has in place to monitor and engage your customer base. Can you react quickly to small changes happening now that will affect your business at a larger scale? Are you leveraging consumer insights to serve your customer base the way they expect you to?

Meet consumers where they are

With safety and quarantine measures being put in place globally to slow the spread of COVID-19, clearly event-based initiatives and physical retail are off the table. But this doesn't mean your brand needs to slow its advertising efforts.

Despite a significant drop in digital spend, marketers should still meet their customers where they are: online. Over the past few weeks, Facebook has reported a 50% increase in messaging usage as consumers look to their site for connection and news. Similarly, Pinterest reported that it saw an “all-time high around the world with more saves and searches on the platform than any other weekend in [its] history” as consumers turn to the platform for ideas of how they can spend their time at home. When consumers visit these platforms, your brand should be there too.

An argument against increasing digital spend — or even maintaining it — is that we are in the beginning of an economic downturn; consumers aren't buying enough to compel advertisers to spend the money to get in front of them. However, there is an upside to a decrease in the number of advertisers on social media, especially auction-based platforms where ad prices are likely to drop — you're more likely to land in front of your intended audience. The brands that are pulling back on digital spend are likely to lose traction with their customers as competitors replace their ad space.

Forbes reports that during past economic recessions, brands "that maintained or grew their ad spending increased sales and market share during the recession and afterwards." But you don't need to limit your ad spend to digital. Direct mail is still an option, and a good one. Forbes continues, “Studies have shown that direct mail advertising, which can provide greater short-term sales growth, increases during a recession.” And with a captive "at-home audience," getting into someone's mailbox may never be more effective.

All this being said, the analytics side of your strategy is just as important as the messaging and platforms you use. You should make sure your team has the appropriate systems in place so you can track how your ads are performing across various platforms and audiences.

Be intelligent about special promotions

With consumer spending slowing, many brands are offering widespread discounts. You can frame these offers in ways that shows your brand is trying to make its products accessible to consumers in an economically restricted time.

That being said, some brands are approaching it in a more utilitarian way, as they realize they have to sell their product in order to survive. Reflecting that honestly in their messaging, they're offering steep discounts site-wide.

As your own brand considers a strategy around discounting, consider your audience. What sort of products are they likely to gravitate toward right now? What would serve them best, while still allowing you to succeed?

Partner with like-minded brands

Everyone loves a good Instagram giveaway. Particularly now, large and small businesses alike are using giveaways as an opportunity for consumers to further explore their brands. Promoting giveaways — especially when partnering with like-minded businesses — increases brand awareness and audience engagement on social media platforms. This has potential to increase short term sales and introduce new customers to your products.

While this isn't a new strategy by any means, during this crisis community is of the utmost importance. Brands can contribute to their online communities by engaging their audiences and boosting morale through the positive messaging normally associated with giveaways.

Humanize your brand

Everyone is experiencing some level of fear, anxiety, and grief right now. There is comfort in knowing that there are real people on the other side of your brand's web page or Instagram feed. Humanize your brand and talk about the people who are working hard to bring your products to consumers.

Many companies have already addressed health-related safety measures their teams are taking to ship out orders to limit the possibility of exposure to the coronavirus. Not only does talking about these new processes reassure customers ordering products online, but it also reminds consumers that we're all having to make changes in our routines. We're all having to adjust to a new normal. There is an inherent level of community in that sentiment, bringing consumers closer to the brands they're relying on right now.



Iterable and Faraday partner up to power predictive growth marketing

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Faraday is pleased to announce a new partnership with Iterable, a growth marketing platform that makes it easy for companies to effectively engage their customers with relevant messaging.

The Faraday AI Platform helps consumer marketers optimize growth initiatives at every stage of the customer lifecycle by delivering predictive insights to a wide range of martech and adtech systems. The new integration enables mutual customers to leverage Faraday's AI-generated predictions — such as likelihood to buy or churn, lifetime value, and persona — in their Iterable workflows.

These predictive insights help enhance the user's ability to segment leads and customers based on their predicted likelihood to purchase specific products, projected lifetime value, and/or their persona cohort.

Armed with these segments, users can easily activate and automate cross-channel campaigns with optimized discounting strategies, informed product recommendations, and personalized ad creative and content. The integration supports the delivery of this information in real time via API, or on a scheduled basis (e.g. daily, weekly, monthly).

Interested in operationalizing predictive marketing workflows? Get started today.

Building a sexual health and wellness brand for the modern consumer: an interview with Eva Goicochea, founder and CEO of maude

Faraday Spectrum interview series with maude
We had the pleasure of speaking with Eva Goicochea, founder and CEO of maude, a Brooklyn-based sexual health and wellness startup, founded on the values of simplicity and inclusivity. Launched in April 2018, maude is redefining the conversation and culture around sexual wellness with a line of sleek and simple sex essentials and a customer-centric approach.

maude: from inception to realization

Eva Goicochea's journey from being Head of Social Media, Culture and Hiring at Everlane to founding sexual health and wellness startup, maude.

After studying marketing, I had a stint as a legislative aide in healthcare by happenstance and it became formative. Later on, I went back into marketing, eventually landing at Everlane four months after they launched. When I left in 2013, I wanted to find a startup in healthcare / wellness that I was just as excited by as I was Everlane and I couldn't find one. While working with clients building their brands, I also started a watch company, Tinker, with two other founders and my husband (great experience for building product). Randomly, we were all kicking around this idea of maude, wondering why there was no better brand in the space and if it was something we should venture out and build. The lightbulb went off — this was the idea I had been waiting for. The rest of the team wasn't actually interested in launching maude, but I was full-in.

In 2015, I started working on the idea, moved to NYC in 2016, raised money in 2017, and went to market in 2018.

Brand loyalty vs. Brand affinity

With big brands like Trojan and K-Y dominating the sexual wellness market, introducing maude required a thoughtful approach and an understanding of consumer needs — which actually helped to set the small company apart from the long-standing giants.

We launched with condoms, two lubricants, and a vibe with the idea that we could solve for the chasm that exists in the industry. Sexual wellness has always felt like it's in two corners: clinical and maybe on the aisle where Trojan dominates — they own 70% of the market and they're very condom-focused. And then you have sex toys and these dark corners of seedy shops where you buy them, even though a vibrator, for instance, is actually a really necessary tool for many, many people. Universally, I was hearing from people — no surprise — that in both places, buying these products is incredibly uncomfortable.

And so I thought, “Why is there no DTC brand for all people where you can buy all of these essentials? These products need to be together. Plus, if we launch with one over the other we're going to get pigeonholed.” And so that's what we did. The past year has proven, also, that people were ready for a new condom brand in an industry with giants.

The thesis here was that because there's a monopolization, there's brand loyalty — people buy Trojan — but there's no brand affinity. And it made no sense to me, or when I spoke to other people, that the sexual wellness industry is so far from what a consumer wants.

Since starting the company, I've done so much more research about the history of this space, specifically condoms, and these companies that have dominated for over a hundred years. Moreover, the industry has been so tied to socio-political movements that somewhere the basics — the human side of sex — has been lost. For too long, it's been something tied to shame or family planning rather than “Sex is human, and all people need condoms for protection. They're the only form of protection against STIs and pregnancy, period.” It's super simple.
maude Staycation retail popup shelf
Photo: Nicole Franzen for maude

Building a human-forward company

Goicochea founded maude on a mission that deeply values their customers, giving them more reasons to invest in the brand and products.

There are two ways companies are led: one is by product, and one is by mission. And a lot of [direct-to-consumer] companies lead by product, essentially saying that their product will change your life. Sometimes that's true; sometimes they are great and innovative. But I think the reality is that the longevity of brands lies in its values and in its true mission.

We want you to understand maude, not because you know every product, but because you align with the brand for its values. The opportunity for any company, I believe, is in creating a community that cares about the mission. For us, it's being a human-forward company and changing the conversation and understanding around the idea of sex.

I used this as an example the other day, whether we love it or hate it: Starbucks created a new language for coffee. Pretty much in every corner of the world, you can find a Starbucks and people know what a latte is. That changed the language of coffee for most people. And that's what we want to do. (Which is going to take a long time.) So given that mission, let's look at the long view.

A strategy of subtlety: Making sexual health and wellness approachable and accessible

Many emerging sexual health & wellness and sextech brands make pleasure a centerpiece of their marketing strategies, which can be exciting for more progressive consumer demographics, but alienates others. In light of this, maude has taken a gentle approach to addressing sex and pleasure in its marketing campaigns and in the conversations it facilitates at events.

I often compare what we're doing to food. For instance, say you're sitting at the table with someone who drinks Folgers (no dig on Folgers) and you're trying to talk to them about third wave coffee. Talking about coffee from the angle of what you should do, or “This is better” or “We know best,” is not going to disarm them. What's going to disarm them is giving them a cup of coffee that's better and then creating common ground (no pun) from which you can then talk coffee. In short, shoveling ideas in someone's face is not going to make them more open.

That's why we don't take an aggressive approach. We want people to learn about maude, try the product, and make the decision for themselves. To date, we have a strong word of mouth and that organic change can't be forced.

Speaking of talking at people, I typically don't even use the word “pleasure” because I think the idea of pleasure is subjective. We create well-made products for your intimate life, and how and with whom you use them is up to you — we can't tell you what your pleasure is. I think there's a lot of appropriation of this idea of pleasure happening right now, and that in and of itself is actually quite exclusive, as is making the idea of sex political.

I'll say it a million times: Sex is human. One of the words I do love actually, is “leisure.” Leisure — or in this case helping you make time for intimacy — is what maude is here to do.
maude Staycation retail popup bed
Photo: Nicole Franzen for maude

Carving out space for sexual wellness in advertising

Categorized as “Adult Products and Services” on Facebook, what's deemed as appropriate for sexual wellness brands' ad creative is limited. While some brands have aggressively pushed back against Facebook's restrictions for this product category, maude believes in creating a new vision for advertising these products on Facebook altogether: one that works to celebrate and share the inclusive values the brand is built on.

We're not actively antagonistic against Facebook — of course we get shut down, and it's really frustrating that it's a blanket rule for “Adult Products and Services.” But we're not angry about it. The reality is that it sex is still taboo and it is still clinical, and it is up to us as a company to carve out a new third lane that creates the societal acceptance needed to eventually change policy. So, while there are other approaches, we're going focused and continuing to come at this from a common sense, matter-of-fact, friendly, happy way, with a long view. It's going to take time.

Staycation: an exploration of temporary retail

Staycation is maude's Summer 2019 pop-up shop in Brooklyn. A collaboration with a multitude of DTC brands, the space shows how the brands' products live well together and can integrate into a consumer's life.
maude Staycation retail popup sign and Floyd couch
Photo: Nicole Franzen for maude

Right now, as we're sitting in this space (our retail front across from our office), it feels more like an installation, and I think it works in that context better. You walk in and you get the idea of this “modern apartment” and where maude lives in your life. And that was actually the whole point — to give the right context. Before, when it was the winter studio and it was just our brand, people were still afraid to walk in, no matter how minimal and friendly the space was. Staycation has provided a greater vision for how we can live as a brand out in the world and allowed for us to actually pitch forward-thinking retail partners who are carving out a space for sexual wellness.

If somebody offered you $100 million for your company, would you take it?

No. The purpose and opportunity for maude is to change the language and culture of sex, and that is going to take time. If put in the wrong hands with speed, it's not going to happen and we'll never reach our real potential, which would ultimately be a disservice to our customers. In short, I'm in it to change history and I believe we will.

This interview has been edited for clarity and flow.

Spectrum is Faraday's exclusive interview series, highlighting DTC brands revolutionizing their industries with innovative products and growth marketing strategies.