Would you rather have a customer purchase from you five times or have five different people patronise your business just once? Many people will choose the second option, which seems better at first glance.
But as much as you may want to gain new customers for your ecommerce business, you need to work on retaining the existing ones. A 5% increase in customer retention can grow your ecommerce business profitability by up to 75%.
You can achieve similar numbers for your ecommerce business by implementing buyer retention strategies. Here, we’ll explore ways to improve customer loyalty and your profitability as a result.
Why You Should Prioritise Customer Retention
Many business owners are sold on the idea that more customers mean more profitability. Hence, they tend to invest more resources into reaching new buyers, often at the expense of retaining the existing ones.
But having new customers isn’t necessarily better than having one buyer come back multiple times.
- New customers are difficult to please compared to returning buyers who you’ve already done business with and know their purchasing habits.
- A returning customer is more likely to have long-term loyalty to your ecommerce brand than a new one. Prospective buyers often like to skip around to find the best deals. So, in most cases, their loyalties are not bound to anyone, and they want to keep it that way. So, chances are, they’ll not continue business with you despite your best efforts to satisfy them.
- Existing buyers who have had previous dealings with you are easier to please. If your products are excellent and affordable, you can easily convince such people to continue business transactions with you.
- You’d also agree that it’s not smart to sacrifice potential long-term relationships for one-off purchases. 87% of customers often tell others about their good experiences with ecommerce platforms. Hence, returning customers are likelier to provide the word of mouth referrals for your business. They’ve tried your business multiple times and now trust you, so it’s easier for them to vouch for you.
- You’ll typically spend less to retain a customer than to get a new one for your ecommerce business. Statistics show that customer retention costs five times less than acquisition. So, it’s a better strategy for profitability.
We’re not downplaying the importance of getting new customers. However, having a well-rounded market share acquisition and retention strategy is vital to maximising growth.
It’s even more critical for businesses that are still developing as it’ll tell on their scalability in the long run.
Ways to Retain Customers For Your Ecommerce Business
Below are some strategies to retain customers and how to apply them to your ecommerce business.
Offer Excellent Products
Many customers will stay loyal to a brand with good product quality. That’s because excellent products are always satisfactory and often positively affect customer retention.
Customers would have no problems returning if they enjoyed the product they got from you the last time. Conversely, you’ll harm your business by providing inferior quality goods and dissatisfying customers in the process.
Increased quality may mean your products will cost more than what the customers can get elsewhere. However, that shouldn’t be a problem if your target market can afford the products.
Don’t compromise your product quality unless that is what the customers want (which is very rare).
Instead, look for other ways to improve your buyers’ satisfaction. You should relentlessly give customers a reason to return for more business with you.
Offer Excellent Customer Support
Continuing from the previous point, the easiest way to keep customers coming back is to satisfy them at all times. And an excellent way to achieve that is by providing excellent customer service.
Customers will feel you genuinely care about them when you ensure they get good support and service when they call for it. And as a result, they’ll have more trust in you and be willing to continue patronising you.
Data from SuperOffice shows that only 1 in 26 ecommerce customers will speak out about bad customer service. The remaining 25 will leave without saying anything.
So for every one bad customer service complaint you receive, there are probably 25 dissatisfied people who didn’t say anything. That means you may have lost 25 buyers in the process.
A loyalty program is one of the oldest ecommerce customer retention strategies in the book. Almost every business uses it now, and it should be an integral part of your marketing strategy.
The natural human tendency is to keep going to where they feel appreciated. We all love to deal with people and businesses that are grateful for our contributions.
Hence, rewarding customer loyalty tells them you see their continued patronage and don’t take it for granted.
Creating a customer loyalty program is the easiest way to go about this. Having such an organised system will help you maximise your buyer retention opportunities.
Additionally, the loyalty program makes your customer feel special by enticing them with specially tailored offers. For example, you can give them a sneak peek of new products with an opportunity to pre-order. This unique treatment will make the buyers feel valued and encourage them to patronise you more.
You may consider the following ideas when creating or looking to improve your customer loyalty strategy:
- Using coupons
- Providing exclusive deals to loyal customers
- Providing exclusive lifetime membership to super-loyal customers
You can even provide loyalty program-esque treatment to first-time buyers. For example, you can give them welcome gifts.
However, you want to be subtle in your approach with first-time purchasers. Don’t try to make them sign up for anything — they may become reluctant when they sense a catch.
Follow Up With Everyone Who Makes a Purchase
You can’t retain your customers if they don’t remember your ecommerce business. Sadly, most customers will forget you, especially if your offerings aren’t so unique from your competitors.
You must ensure buyers always remember you whenever they want to buy products you offer. And the easiest way to do that is by following up with them.
You can reach out to and follow up with customers via the two avenues below.
Email marketing is integral to the overall digital marketing experience. But it’s not only helpful in getting new customers, but it’s also very effective for bringing old ones back.
It’s the easiest way to engage individual buyers without making them visit your website. But the best part is that a strong email marketing strategy will also help you build customer relationships.
That said, you should be intentional about your email follow-up strategy. Build a list by asking customers to provide their emails when purchasing. Then you should group the customers and target each category with tailored messages.
- You must tailor your email content to each group. Don’t spam customers with low-quality messages. Instead, ensure each email is relevant to the members of the group you’re sending it to. More importantly, ensure it offers reasonable value to them.
- Avoid overwhelming customers with offers and emails. You risk customers unsubscribing from your list if you send too many message. Instead, you should be strategic about what you send out and how you send them out.
Don’t limit your emails to promotional messages. You can also send educational content to your customers. Additionally, you should note and celebrate special days with your emails. For example, consider these unique email ideas.
- Special day emails (Celebrating birthdays and public holidays)
- Anniversary emails (Celebrating milestones of the customer’s shopping experience with you)
- Exclusive offers ( Emails containing special offers, e.g. get 20% off your next purchase for being a great customer)
Social Media Retargeting
Social media provides a fantastic avenue for retargeting existing and prospective customers.
For example, Facebook and Instagram allow you to put your products in the face of customers who have checked them before. This reminds customers and prospects of your products and brand.
But, of course, you may not be able to segment your customers into groups and target them with specific messages on social media. However, a well-tailored social media ad can still do a fine job of putting your brand in the buyers’ minds.
Initially, much guesswork goes into using social media for customer acquisition. But it’s different for retargeting customers. You already have some key information about the customer, and you can maximise that when implementing your retention strategy to retarget them.
Primarily, you already know the people receiving the ads since they have done business with you before. So you have a good idea of what they want and can target them with that.
Market to Your Customers’ Interests
It’s more challenging to sell items to customers when they’re not looking to buy them in the first place. In the same way, it’s difficult to get a customer to do business with you again if you keep sending them offers they don’t have interest in.
For example, you won’t achieve much by sending promotional offers for sports equipment to someone interested in cooking. Hence, consider the individual’s preferences through their previous purchases to market to their interests.
Additionally, if you’re considering posting new content on social media, stop thinking about how your audience will receive it.
- Will your followers like that kind of information?
- Can it jeopardise your relationship with them?
These factors can influence your ability to retain customers for your ecommerce business, and you should always keep them in mind.
Provide Personalised Experience for Returning Customers
Personalisation is one of the easiest ways to make a customer happy with your offering. You make them feel special when you send them personalised messages and give them a unique shopping experience.
70% of customers say they tend to be more loyal to companies that understand their personal needs. Going that extra mile to personalise the experience for the customer may be all you need to retain them for your ecommerce business and keep them loyal to you.
Personalisation isn’t as difficult as it often seems. Simply using the customer’s name in a welcome back message the next time they visit your ecommerce store can have a tremendous effect.
But that’s not all; you should make more effort to collect key personal information about your customers. Try to get to know each of them and use the data appropriately when sending out emails and promotional content.
Below are examples of ways to retain customers for your ecommerce business through personalisation.
- Customise the homepage to display personalised offers for returning customers based on their previous purchases or recent views.
- Change or enable customers to change store navigation to their preferences.
- Send personalised emails or notifications. Ensure they include the customers’ names and sound like they’re written to the customers.
- Recommend product categories based on interest and browsing behaviour.
- Suggest complementary products.
Personalisation helps deepen the bond between your brand and the customer when used appropriately. It gives the customer the impression that you know them and they can trust you.
Use Customer Relationship Management (CRM) Tools
Despite your good intentions and best efforts, you may find it challenging to maintain a solid relationship with all your customers. A good customer relationship management tool can help you in such a situation.
These tools help you manage your interaction with customers. They’re especially effective in maintaining excellent and seamless communication with the customers. And as you would agree, good communication is essential for maintaining a relationship.
Depending on the CRM tool you use, you should be able to incorporate different means of communication into one system.
For example, it should let you manage all your customer interactions via SMS, calls, email and social media in the same place.
Improve Your Customer Retention Rate with CRO
Conversion rate optimisation (CR0) is a technique that helps increase how many prospects you turn into customers.
CRO incorporates a seamless, pleasant shopping experience with personalisation and great marketing to improve your overall retention rate. Specifically, CRO helps you do the following.
Determine Your Most Loyal Customers
Conversion rate optimisation often begins with analysing your website data. It uses analytics tools to trace heatmaps and identify the category of customers that generate the highest revenue for you.
The analysis result gives insight into the customers who buy the most from you. You can then target customers with loyalty rewards and promotional offers to get them to continue doing business with you.
Determine your Most Profitable Channels
While CRO conducts a deep analysis of your website data, it doesn’t only show your most loyal customers; it also identifies your most profitable channels. It looks at your marketing avenues and shows you how each is performing.
Through that, you’ll know if your email, social media or display ads strategy is providing the highest conversions. With that insight, you can work on a plan to improve the channels for better results in terms of customer retention.
Adapt to Your Customers’ Preferences
The whole point of conversion rate optimisation is to improve all the aspects of your business that bring the highest returns.
CRO provides insights into improvements that’ll help you keep up with the changes happening in the industry. As a result, you’ll be better positioned to retain customers for your ecommerce business and keep them loyal to you.
Determine Why Your Customers aren’t Coming Back
Again, considering how CRO uses analytics to provide insights, it also highlights the processes you’re getting wrong. You can use this information to determine what’s discouraging your customers from returning.
For example, analytics may reveal that the user experience on your store isn’t below par. Alternatively, it’ll tell you if the navigation is too confusing or maybe the customers are having difficulties checking out their orders.
And, of course, once you know where the problem is, solving it becomes much easier.
Metrics for Measuring Customer Retention Rate
Understanding the critical customer retention rate metrics is essential to improving it and growing your ecommerce business.
Repeat Customer Rate
Repeat customer rate is the core metric in measuring the effectiveness of any customer retention effort. It primarily measures how many buyers patronise you a second time. Hence, it tells you how well your strategies to retain customers are working.
Fortunately, calculating customer repeat rates involves a straightforward process. You only need to divide the number of customers who purchased from you more than once by the number of unique customers.
Unique customers are the people who purchased from your store at different time frames. Or customers who have only purchased once.
- The equation looks like this: #of Customers Who Purchased Multiple Times / # of Unique Customers
Having customers come back once or twice doesn’t mean you’re good at retaining customers for your ecommerce business. What makes an excellent retention rate is having the customers become loyal to your brand.
Purchase frequency shows how often your old customers come back to buy from your ecommerce store. It tells you how well you’ve been able to retain customers for your ecommerce business and if you need to make improvements.
Calculating the purchase frequency is similar to how you derive the repeat customer rate. You only need to divide the number of orders by the number of unique customers.
Your customer churn rate is the number of people that stopped patronising you at any given period. Primarily, the churn rate is the opposite of the repeat purchase rate.
A number of factors can be responsible for a high churn rate.
- Customer expectations were not satisfied
- Customers found a better alternative
- Poor user experience on your website
Customer retention should be a priority when considering strategies to improve your business profitability.
Keeping customers loyal to your brand takes a lot of effort, but not as much as getting a new buyer. Interestingly, it’s also more profitable.
You’ll retain more customers for your ecommerce business if you give them fewer reasons to seek out or go with the alternative options.
Our ecommerce team at Axis Shift can design retention strategies to grow your business. We are an investment team that partners with struggling ecommerce businesses — turning them into profit powerhouses.
Call 020 805 05795 to learn more about how we can help your ecommerce business grow!