7 Ways to Improve Customer Retention Strategy for eCommerce
Quick Summary Customer acquisition costs (CACs) are one of the biggest expenses for any eCommerce company. In industries like fashion, beauty, skincare, luxury, lifestyle, and home goods, CACs are on the high end.
You know the customer retention definition. It's the ability of a company to generate repeat business from its customers. For eCommerce companies, repeat business will be your most profitable — and most efficient — business. The probability of selling to a new customer is between 5% and 20% once you get their attention. The probability of selling to an existing customer is between 60% and 70%.
Customer Retention Benefits
Repeat customers shop more frequently and spend more when they do. Once you create loyal customers, your CAC drops dramatically.
Loyal customers also significantly improve your Customer Lifetime Value (CLV), which grows your company and leads overall to higher eCommerce revenue. In many industries, just a 5% increase in customer retention can equate to a 25% increase in profitability, according to a study done by Bain & Company.
Customer Retention Strategies for eCommerce
So, yes, repeat customers are good. Loyal customers are even better.
Here are seven ways you can improve your customer retention strategy and build loyalty to grow your eCommerce company.
1. Start a Customer Loyalty Program
More than 90% of companies have some kind of customer loyalty program, and for a good reason: they work.
One of the best ways to grow your customer retention rate is to start a customer loyalty program.
Think about the rewards you can give. Some ideas that customers look for include:
Points for product redemptions
Early product releases
60% of customers say that unexpected rewards are the biggest reason they stay loyal to brands.
Need inspiration for your customer loyalty program? Read our recent blog on the top 8 programs.
2. Work on Your Brand’s Social Media Marketing
Social media plays a crucial role in DTC product marketing.
Social media marketing isn’t just about pushing messages out to your customers. Active listening and responding quickly is key to increasing engagement. This applies to your marketing and your customer service.
For health and beauty goods, social media gives you an easy way to showcase your products, feature your customers, and use social media influencers to share your message.
Getting people to connect with you on social platforms so you can regularly expose them to your marketing messages is another great way to drive loyalty.
Learn how to increase sales through social media marketing here.
3. Optimize Your Email Marketing to Include Codes and Discounts
Once you’ve made that first sale, you’ve already overcome a huge hurdle. Now, it’s time to nurture that relationship and attract additional eCommerce revenue.
Coupon codes and discounts are great ways to encourage future sales while giving you a way to track conversion rates. As a DTC brand, you should always split test (A/B testing) different marketing strategies to optimize what works.
For example, do your customers respond better to a 10% discount offer or free shipping? Does a BOGO (Buy One, Get One) offer resonate better than 50% off your next purchase? Does a sitewide 5% coupon code work better than 20% off targeted items?
The answers can be very different for companies in the beauty, skincare, luxury, lifestyle, home goods, and fashion industries, and even for companies within those industries marketing to the same customers. To optimize your email marketing, you must always be testing.
See how we launch & scale brands on Shopify Plus with a data-backed approach
4. Give Discounts Specifically for Second Purchases to Reel in Newer Customers
Welcome emails have some of the highest email open rates. While the average email open rate is just above 20%, a welcome email to a new customer is opened more than four times the average (82%).
When you send that welcome email, one of the best ways to encourage a second purchase is to provide an incentive. Offering a discount or free shipping on their next purchase can lead to repeat purchases. Value-added offers, such as gift-with-purchase options, can also entice customers.
Coupon codes are a great way to track the success of your campaigns and drive repeat customers into your marketing funnel to turn them into loyalists.
5. Work on Your Customer Service and Support
Customer service and support are at the core of creating an effective customer retention strategy. You can have great products, but if you have poor service, you certainly are not going to create customer loyalty.
96% of consumers say customer service is important to remain loyal to a brand. The inverse is true as well. The top reason customers report switching brands is poor customer service. When customers feel unappreciated, they switch. Poor customer service is the fastest way to lose customers.
To stand out in today’s competitive marketplace, just providing average service won’t even get you noticed. You need to go above and beyond to make an impression.
6. Start Using SMS Marketing
SMS marketing (text messaging) also produces very high open rates. Gartner says SMS open rates can run as high as 98% and response rates as high as 45%.
SMS marketing should be part of your omnichannel approach to customer engagement. SMS is direct and immediate. Customers see them and read them typically within minutes.
Use shortcodes to simplify responses. This can be an effective way to build your customer database.
7. Improve Your eCommerce Site
Your marketing efforts have worked. Congrats! You’ve been able to drive people to your eCommerce site and check out your offer. So, why aren’t more people buying? Most eCommerce sites focus on price and product — and those are important — but just as important is the customer experience shoppers have when they visit your eCommerce site.
The key is making it easy to buy. Your site must be intuitive to navigate, fast to load, and an inviting showcase of your products.
You need to reduce any friction that exists on your site to build loyalty. That’s especially important in the checkout process. Once a customer puts something in their shopping cart, you want to make it as easy as possible to buy. Every step you add will cost you sales.
Don’t forget about mCommerce, either. The majority of eCommerce sales today are done on mobile devices, yet a surprising number of eCommerce retailers still haven’t optimized their sites for mobile. 62% of online shoppers say they are less likely to buy if they have a negative mobile experience.
Improve Your Customer Retention
You already have a great group of customers, but it’s time to make their experience with your brand even better so they stay your customers.