The Best Guide on How to Improve Customer Retention in Ecommerce
Posted on June 30, 2022
I have said it before, and I will repeat it: I am the biggest, nerdiest, most passionate eCommerce consumer in history. Naturally, I always lean towards eShops that know how to increase customer retention, especially for customers like me, who buy everything online and will return, with stars in their eyes and a credit card ready to spend more. Again, and again.
What makes me – and the other millions of people who shop online – return to the same stores?
Like with everything business-related, there’s no given recipe. However, the right combination of factors can make your customers more loyal. Like I am with the stores I go back to every time I need (read: want) something.
Why Improve Customer Retention in eCommerce?
There are a million ways to answer this question – but they all lead to the same answer: you have to improve customer retention online.
If we have to narrow it all down, there are about two main ways you can answer it:
The Ethical Perspective
It makes sense to want to offer more to those who have the potential to buy from your store continually. After all, you want to show them you are grateful – and you should be. Every new purchase from every customer (new or recurrent) is a step forward for your company and a small victory against your competition.
Yes, gratefulness goes a long way. So it makes all the sense in the world to show it to your customers.
The Numerical Perspective
Let’s say gratefulness isn’t much when it comes to making an actual business case for retention. In a world of numbers and cash flying in and out of your company’s bank account, it also makes sense to follow the money trace.
Does it pay off to increase client retention?
Think of it this way: in 2018, the total global market size in the eCommerce industry measured a staggering $2.8 trillion. Moreover, the great news about it is that the entire number is projected to skyrocket to $4.9 trillion by 2021.
Source: The Global Ecommerce Playbook
That’s a mountain of opportunity right there. Sure, you might not be able to tap into everything – but even if you target a tiny slice of this whole eCommerce cake, it’s still going to be quite significant. Also, if you do it correctly, things will only continue to grow from thereon.
What does this have to do with eCommerce retention?
Studies show that there is a 60-70% chance for a recurrent customer to buy from you, while only 5-20% of the new customers are likely to buy from you. The value of a repeat, loyal customer will continuously pile up as there will be less investment and more ROI every time they decide to come back to you.
It’s like a Perpetuum mobile – customers will bounce back to you, again and again, generating buzz in the process (and as such, making money for your business).
Let’s use a specific example to make this point. If let’s say, you invest $1 for every new customer and only 10 of 100 buy a product worth $5, which means you will have spent $100 and got a $50 ROI. If, however, 6 of the ten newly acquired customers would buy from you again, you will already add $30 more to your ROI. Moreover, if they buy a third time, and if 1 of them recommends you to their peers, your investment will start to be profitable.
Non-returning customers might seem like less work – after all, there are more than 4.3 billion internet users out there, and you can tackle plenty of them, right?
Not investing in customer retention means losing opportunity – and that is never a good business strategy.
Improving customer retention as an eCommerce owner makes sense no matter how you look at it.
Top 15 Tips to Improve Customer Retention
There are many things you can do to retain customers – and creativity is more than welcomed in the process as well.
Some examples include:
Don’t Be Afraid of Email Marketing
Contrary to what some may believe, email marketing works. It works very well – studies show that email marketing ROI is staggering: 3800%. Both B2B and B2C companies use it as well, so regardless of what you are selling, you are bound to find email marketing to be quite helpful.
Keep in mind that not all emails sent by eCommerce companies are retention emails. Some campaigns are meant to bring back users that have fallen out of the funnel before becoming actual customers.
Work on Your Brand
One of the best ways to improve customer retention is to create a brand they can always associate their values with.
Branding is not in any way a new tactic. It has been used since forever – look at Apple or Coca-Cola, and you will realize how people associate these brands with specific values.
For instance, you will always associate Coca-Cola with dinner parties, fun times, friends, and Christmas:
When people recognize your brand, they are much more likely to come back to you. This rule stands just as right in a brick and mortar store as it does in an eShop.
Invest in Social Media
Social media can be an excellent ally in the race for attracting and retaining customers.
However, it is not enough to post regularly. You have to create campaigns that catch your target audience’s attention.
Like it or not, this might mean you will have to invest in social media ads as well. Do make sure you think things through when it comes to these campaigns:
- Consider the target audience
- Consider the products you are selling
- Consider the purpose of the campaign: retention.
Create Reward and Loyalty Programs
Creating loyalty programs and reward programs will attract more loyal customers – that is the purpose of these campaigns, in the end, right?
There are many loyalty programs you can steal inspiration from. Flight companies, for example, will offer you bonus points you can use to fly again. Sephora does it. Moreover, thousands of other eShops and eCommerce businesses do it too.
The key lies in making it worth it. A 1% discount on products that are already within the higher price margin for their category won’t account for much. Encouraging people to spend more, however, and offering them a significant discount in return can be helpful. For instance, Swarovski built a campaign where they offered a 20% discount for all members who spent more than $300 throughout a calendar year.
Make it a Personalized Experience
Website personalization can go a long way in eCommerce (and not only).
The more personalized a customer’s experience is, the more likely it is that your conversion and retention tactics will work out better. Personalization is one of the tried and tested methods to improve customer retention – and there is no doubt about it.
If you are looking for personalization inspiration, Netflix has a perfect example. You can read more about it here.
Delivery and Returns
This is a standard rule that applies to both conversion and retention. The easier and cheaper (read; free) your delivery and returns are, the more likely it is that people will not drop your checkout before they pay.
Even more, low-cost delivery and returns can also help you retain a more significant percentage of customers. After all, it makes sense that they will come back to your store if they know for a fact that they don’t have to pay for shipping/ they can quickly return products if they don’t suit them.
We have talked quite extensively if a guest checkout will break your eShop. As such, we won’t get in-depth with it here. The main tip to keep in mind is that guest checkouts can improve your conversion rate – but you also have to make sure you implement them correctly so that you don’t sacrifice your retention rate in the process.
This rule circles back to guest checkouts. You cannot launch retention campaigns if your visitors don’t sign up on your site, but you can’t force them to do it either (as this will make them pack their bags and leave).
You have to find the right balance between encouraging users to drop their email and leaving them be.
Identify the Loyal Ones
How can you build proper customer retention campaigns if you don’t know who your loyal customers are?
Take a good look at your customer database. Who are these people, what makes them tick, and why is it that they continuously return to you? Running a survey might help, as it will provide you with a better idea of the specific marketing techniques that made them more loyal to your product.
Make Repeat Purchases Easy
If the types of products you sell are the kind that can be purchased on a recurrent basis (e.g., soap, home supplies, detergents, and so on), you should make sure it is effortless for your customers to repeat a purchase.
DollarShaveClub is a brilliant example in this direction. A simple, but a qualitative product can become a subscription for most people (because men shave regularly and they have to change their razor blades on a recurrent basis) – and it can boost up to a business worth $1 billion.
Offer Excellent Customer Service
None of the points described so far make any sense if your customer service is not up to par. You can have the best product and the best prices in the world, but if your customer service team is rude and misinformed, you have lost it all.
There’s just no way around it. Invest in a stellar customer service team, and the results will pay off – and yes, this includes the fact that you will improve customer retention as well.
Internalize Feedback and Questions
Not only should your customer service team provide users with a great experience from head to finish. They should also be able to relay some of the most common feedback points and questions as well.
This will allow you to create campaigns that answer the customer’s questions and needs before they are even raised. As such, it will help you gain your customers’ trust and improve customer loyalty.
Target Your Customers
We might not need to tell you this, but if you do invest in marketing, make sure you target your customers.
Everything about your campaigns, from the channel to the actual design and message, should be geared towards the buyer persona(s) you have drawn out. Doing this will help you make sure you speak to your customers instead of simply pouring money into poorly-built marketing campaigns.
You can try the best marketing strategies for creating customer loyalty in online business. If they are not meant to target your specific industry, it’s all money spent in vain – and you will definitely not improve customer retention for your eShop this way.
Don’t Oversell Yourself
Don’t promise more than you deliver. Don’t oversell your products. Also, don’t lie.
This might seem like common sense, but the minute you have been caught red-handed is the minute you have lost the customer you have been dishonest with. Moreover, that customer is very likely going to leave you an awful review, making you lose even more customers in the process.
Use the Right Tools
We’re not saying this because our tool can be used in eCommerce retention (cough, cough). However, the right tools can go a long way when it comes to increasing the customer retention rate. Keep in mind that you will need:
- An email tool (for your campaigns)
- A social media tool (especially if you want to invest in ads)
- A form building tool for email collection (cough, cough, again)
- A CRM tool to analyze current (and recurrent) customers and their feedback
Online customer retention in eCommerce is a long-term game. It’s essential to be realistic about it, and it is vital to be consistent about it. Test out what works for your business and implement those techniques that show the best ROI.
eCommerce retention might not be easy.
But it is more than worth it: it is crucial.