#1: The Milk Problem

Welcome to the inaugural edition of my weekly newsletter! I’m Alex, Founder of RetentionX , where we specialize in transforming raw data into actionable insights that help your brand thrive in a competitive market.

Today, I'm revealing how a simple shift in product placement boosted a retailer's profits by 25%—all by strategically positioning high-demand items to encourage additional purchases.

Featured: The Milk Problem

Most DTC eCommerce brands are missing the "milk" and that is why they cannot scale! 👇

Ever wonder why milk is always at the back of Walmart or Target?

This isn't by accident, but a clever marketing strategy I call "the milk problem."

Picture this: You enter a store to grab a gallon of milk, but on your way to the checkout, a string of enticing merchandise catches your eye. By the time you reach the register, your two items have suddenly morphed into a full cart. Familiar?

Walmart and Target have perfected this art. They lure you in with high-demand items like milk, but their wide selection often convinces you to pick up a few extras. The result? Bigger profits on your visit.

However, where does that leave Direct-to-Consumer brands who don't have "milk" to draw you in?

They're left in a never-ending cycle of investing time and money trying to bring customers back to their store. Let's say you sell designer bags—Facebook can display your designer bags to potential buyers. But acquiring profitable repeat customers when you have to pay to convince them to return can be a mammoth task.

DTC brands often inflate their prices to cover heavy marketing expenses. The more they hike up prices, the more they end up spending on marketing efforts to justify those prices... It's a perpetual cycle.

Walmart and Target sell everything. They use high-demand items, selling them at or below breakeven as part of their marketing strategy, then upsell with high-margin items. This strategy has allowed these retail giants to outperform many grocery stores with their supercenters. They lure you in with essentials and enchant you with an array of merchandise. And the result? You walk out with more than just cheaper milk.

How to apply the concept

One way to approach this with your brand is to analyze the lifetime value of customers who bought a particular product as their first purchase. Which products are bought a lot as first time purchases and still drive long term value. This analysis is available within RetentionX.

• LTV 1 Year of New Customers: What was the profit per customer within 1 year of purchase in this category?

• LTV of All Customers: Does buying this category have a positive impact on existing customers?

• Share of Orders Leading to a Follow-up: How often did someone place another order after purchasing a product in this category? → Brand Loyalty

• Share of Orders Leading to a Follow-up incl. the Product: How often has someone made a repeat purchase in the same category? → Product Loyalty

So, what is your "milk"? And if you lack a "milk" to draw in customers, how do you plan to break the cycle and thrive in the competitive DTC terrain?

Summary

I know that’s a lot to take in! I’ve been in the same position—feeling overwhelmed about where to find the data, how to get started, and how to embed an LTV-driven mindset into my teams. That’s why we built RetentionX. It was my #1 internal tool as a brand operator to turn things around before launching it as publicly available software. All of the strategies above can easily be analyzed and implemented with RetentionX.

If you enjoyed this article and want to implement this mindset for your brand, don't hesitate to book a call with me below.

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