Executive Action Items: How Dagne Dover, Knix and Oats Overnight think about retention and servicing their customers

Deepa Gandhi, co-founder and COO of Dagne Dover, a performance bag brand that sells everything from backpacks to diaper bags to luggage. In addition to its own website and store, Dagne Dover’s products are found in Equinox, Nordstrom and Dick’s House of Sport, among other wholesale partners.

Brian Tate, founder and CEO of Oats Overnight, a company that sells a spoon-free, high-protein oatmeal. Roughly 70% of the company’s sales come from its DTC business; Oats Overnight is also in more than 9,000 doors at retailers like Target, Walmart and Costco.

Nicole Tapscott, chief commercial officer of Knix, known for its leakproof period underwear. Over the years, Knix has expanded into other products like swimsuits, activewear and bras. Based in Canada, Knix’s products are available in retailers such as Holt Renfrew and Sporting Life in Ontario. Knix also has upwards of 10 stores, between pop-ups and its own permanent locations. 

Thoughts on the term ‘direct-to-consumer’ and how to service customers in different channels 

Gandhi:  “I always struggled with being considered a ‘DTC brand,’ because when we launched DTC, brands truly were, like, “We’ll never go to wholesale,” … and for us, we always knew that was going to be part of how we got in front of customers. … I personally prefer ‘next-gen brand,’ like that kind of vernacular and language, because I think that is much more appropriate. I think there is a distinguishing factor of a next-gen brand or a DTC brand, which is that we were approaching how we acquire our first customers, how we think about pricing, how we think about marketing and how we just think about the entire user experience in a different way.” 

Tate: “I agree with Deepa. … DTC is what it is, it’s a channel. I think it’s an opportunity to, of course, build a relationship with customers. Right now — as we go to retail, grocery, we’re now in, like, 10,000 doors, we just launched club nationwide this year — we’re learning how this [DTC] channel interacts with other channels and how to think about marketing in this channel. And for us, the focus is really: Where do we find synergies? Like, how do we build that brand message with customers? How do we get that engagement? We develop products with customers, and so how do we basically make DTC an engine that is more than just marketing and selling online?” 

Tapscott: “I think what we’ve realized [for next-gen brands] is it is about being direct-to-consumer, but where [the customers] actually want to consume. … Do they want to buy it directly from your site? Do they want to buy it through TikTok Shop? Do they want to buy it through Nordstroms or through grocery or drug? And it’s about finding those appropriate ways, dependent on what the actual customer is looking for, to provide your product or service direct to them in that place. … If you want to be a huge business and you want to be a huge brand, and you have aspirations to really create movement in your space and in your category — which I know [all of these brands here] would like — you have to kind of go where people are. If you build it, they won’t always come.” 

How brands think about retention  

Tapscott: “We look at a couple of different things. We look at repeat purchase rate in a 90-day window, and then we look at a 12-month lifetime value of the customer predominantly outside of that.  So typically, especially for first-time customers, what we’d love to see is: You got your product and you loved it, … and so you came back and you bought a lot more. That’s what we’re trying to drive. It’s just an indicator both of product veracity and love for the product, love for the brand, but also an indicator of the quality of the customers we’re acquiring via the channels we’re investing in. … Of course, we look at things that are … leading indicators of customer lifetime value. 

So are they engaged in our emails? Do they follow us on social? What’s our social share of voice like? What does social listening say about our product, whether it’s on Instagram or Reddit or wherever? What does our ‘How did you hear about us?’ survey say? …. ‘I hear about you from a friend,’ we always like to see that as the No. 1 … So those, to us, are more like leading indicators of the health of our customer base.”

Tate: “We try to get the earliest signal possible. So we’re looking at, basically: After month zero, month one reorder rate, what percentage of them take a second order? We optimize our product mix by retention. We actually have a relative retention metric by flavor. And so our portal isn’t optimized by highest volume or highest acquisition. It’s actually optimized by the highest retention flavors. We can tweak [the flavors] and keep seeing the impact on that second-month reorder rate.

Long term, of course, we’re always looking for LTDs on a 12-month basis and longer. … [Our business] is a bit seasonal. A lot of people enjoy that ‘New year, new you,’ and they’ll get back on their diet. … [We think about retention], like, ‘If you could wake up on 10th day after eating [Oats Overnight] every single day, what’s the flavor that you crave after 10 days of eating?’ And oftentimes that’s not the same as what tastes good in that single sample – like, you don’t want chocolate cake the 10th morning in a row, right? And so that’s really the goal there, is finding flavors that are repeatable after long periods of time. A lot of classics like cookies and cream and cinnamon roll are some of our highest retaining flavors.”

Gandhi: “For us, [retention is about] two things. One is just: What’s the next product you need? So often, we find that people buy the same product, just in different sizes. They love our Landon carryall, they just need it in a different size. … But really generally, our goal, especially through the offerings that we have, is to get them to buy as much of the system that we provide in their first three to six months of being a customer with us. And the other piece is gifting.

People love to gift our products – it makes up a significant portion of our revenue for a handbag brand. And so we push that; we love to make sure that we’re top of mind when you’re thinking about buying gifts. Like, [we were just in] the Mother’s Day push, and this is a fun time for us; this is an exciting time for us, because there’s so much that you can give any mom in your life. For us, it’s a greater area of opportunity, converting a one-time customer into a gift-giving customer.”