The retention premium: why premium brands underinvest in lifecycle

There is a reliable pattern in premium and luxury businesses: enormous care taken over the acquisition experience, and something close to indifference after the transaction. The campaign is exquisite. The post-purchase email looks like it was written by the payments processor, because it was.

This is strange, because the economics point hard the other way. At a high average order value with a long consideration cycle, the second purchase is worth several times a new customer, and the customer has already told you what they like by buying it.

Where the reluctance comes from

CRM has an association problem in these businesses. It reads as the discipline of discounting, list-buying and daily sends — the aesthetic of the outlet mall. Faced with a choice between doing that and doing nothing, a brand protecting its position will correctly choose nothing.

But the alternative to a bad lifecycle programme is not an absent one. It is a lifecycle programme that behaves the way the brand behaves everywhere else: infrequent, useful, well-made, and addressed to someone specific.

The alternative to a bad lifecycle programme is not an absent one.

What good looks like at the top end

• —Fewer sends, each with an actual reason to exist beyond the calendar.
• —Segmentation by behaviour and category affinity, never by send date alone.
• —Service as content — care, repair, provenance, authentication.
• —Access rather than discount as the reward mechanic.
• —The same editorial standard applied to email as to the campaign.

A programme built this way routinely doubles repeat rate within a year without a single promotional message. It also tends to be the highest-margin revenue in the business, which is a useful thing to be able to say in a board meeting about a channel that was previously considered beneath the brand.