Hey everyone,

I've spent the last two weeks living inside our pitch deck. We're raising a small growth round, and putting your own business in front of investors does one useful thing: it forces you to be honest about the number you'd normally talk around.

Start with the part I'm proud of, because it's real and it took years to get here.

We're now a 10 year old brand (wow, still blows my mind) that came out the other side of an MBO and an integration that nearly broke the momentum. Look at the first half of this year against the same months in 2025, and the efficiency story is hard to argue with.

The short version: we spent 17% less on marketing and got a lot more out of it. MER up to 3.95 from 3.33. Google ROAS at 5.4, Meta back up to 2.86, Bing close to 6. CM3, our contribution after marketing, more than quadrupled!

The brand-health numbers moved the same direction. We pulled discounting from 29% of revenue down to 12%, and managed to get our return rate down from 27% to 19%! I think a bunch of you are in fashion, so you know what that returns number means to your P&L and your sanity. Now my favorite thing: erlich is first-order profitable on a CM2 basis since Q1, sitting on a CM1 north of 70%. Our CRM does 17% of net sales at a 43% open rate, 200k following across social and email. And we run most of it with a team of now eight, down from close to 40 a few years back.

I don't list that to brag. Well, maybe a little bit, it’s been a lot of hard work from the team. Our foundation is genuinely solid, and that's exactly why the next part annoys me so much.

So, the efficiency hides something. We got leaner and more profitable per customer, which is the right reflex in a market this rough. But repeat-customer revenue actually slipped about 4% while new-customer revenue held and grew a bit. The growth we're missing lives in one place: the people we already won aren't coming back often enough.

Which brings me to that annoying number.

Let me be precise about what it is, because retention gets thrown around loosely. This isn't our overall repeat rate. It's the cleanest, most honest version: of the new customers we acquire, how many come back for a second order within a year. First order to second order. 15%.

Years ago that number was 30%. Same brand, same product DNA, double the rate. We've stood on that number before. So the real work is figuring out what changed since and fixing it.

So the first thing i’ll do is ask our consumer even more regularly what annoys them. In various places across the consumer journey. My hypothesis is: two bigger things used to carry that second order for us, and both went a bit quiet.

Sustainability was a real reason people came back. For a stretch it sat near the top of the buying decision in our category. It doesn't anymore, at least not in DACH, not in the consumer mood of the last two years. We keep doing the fair and local supply chain (as local as possible, some raw materials like our organic cotton still comes from the global south. There’s simply no way to source that in Europe), the degradable and recycled lace, the focus on evergreen styles. It's our DNA and we couldn't run this company another way. But I'd be lying if I told you it still pulls people back to a second order the way it did.

The other thing was the macro. We had a tailwind for years. Now it's the toughest consumer environment DACH has seen in two decades, and our customer is feeling every euro of it.

I’ll be honest with you, this is a bit frustrating as we've massively built out our CRM in the meantime. Professionalised the whole thing. Flows that do a decent € per recipient, campaigns with a lot of thought behind them, the machine runs. Retention should have followed. The tooling is done and the second order still isn't showing up at the rate it should. My read: we built a strong machine for talking to customers, and we still haven't given them a good enough reason to come back. That's a harder thing to fix than a broken flow.

Five moves. The first three are squarely about retention. The last two sit under acquisition on the plan, but they feed the same engine, so I'm counting them.

One, lifecycle segmentation. VIPs get tiny, margin-safe perks instead of blanket discounts. Signups that look like high churn risk get an individual incentive early, before they go cold. Lapsed customers only get funnelled into the flows that are actually relevant to them, not the full firehose.

Two, smart reactivation. Print mailings at least 4x a year, because a physical thing in the hands cuts through when the inbox doesn't. Material samples in the box so the next purchase decision is half-made before they open their laptop. And a few out of the box ideas we're testing, a willy wonka style activation among them.

Three, expand our erlich Friends membership. Personalised welcome and post-purchase flows depending on whats important to you, a product testing program, event access, a new "Radikal erlich" format. The bet is simple: make the second order about belonging to something, not about a 15% off code that trains people to wait for the next sale.

Four, deepen creators and partnerships. Long-term relationships with micro and macro creators, plus an affiliate program built for high-engagement nano creators. Most of that budget is brand awareness, but the trust a familiar face passes on is a big part of what makes a second order feel safe.

Five, the organic flywheel of community events. We're scaling to more events across three cities in 2027, and will be adding more every year after that. They're our most authentic content source for every channel, and the people who show up in a room rarely churn quietly.

The plan says 25% by 2027. I'm holding 30% as the real north star, because that's where we were before the world got weird, and I believe in putting up ambitious targets.

I could be wrong about the cause. Maybe part of this is just the macro and 15% is the new floor for affordable sustainable underwear in DACH at these price points. We're betting it isn't, but I'm holding that loosely, not pretending I've got it solved. We don't yet.

If you've pulled a first-to-second order rate back up in a market like this one, I want to hear what actually moved it. The specific play, the offer, the timing, whatever it was. Just reply, i try to read every mail and respond

Ok, that’s it. Gotta board a plane now, have a great weekend everyone.

Philipp

If you like what you’re reading, share this newsletter with a friend using this link here below. Means the world to me.

As a thank you, i’ll send you my actual AI ops stack. The skills and workflows I actually use every day at erlich textil and for my advisory clients.

Have a great day,

Philipp

P.S. A few of you replied to the retention piece I sent in May asking how I track this stuff cleanly. If your numbers are murky and you want a second pair of eyes on them, just hit reply. No deck required.