You can spend a tremendous amount of time and money driving traffic to your website and converting those leads.
In fact, the amount of resources used to get new customers for an ecommerce business is significantly higher than the cost associated with selling to an established customer.
With this in mind, developing an effective customer retention strategy is an essential component of a successful ecommerce business.
What is customer retention?
Customer retention is the process of continually engaging established customers so that they return to shop at your ecommerce store.
There’s no single step that you should take to improve customer retention. You’ll instead need to develop a complete strategy and incorporate it into your business’s marketing campaign.
If you’re looking to increase sales or scale your ecommerce business, retaining customers is absolutely essential.
Important customer retention metrics
As is the case with other aspects of your ecommerce store’s marketing strategy, customer retention efforts must be carefully monitored and analyzed. Through ongoing analysis of customer retention metrics, you can identify areas that require improvement.
By making strategic adjustments to your efforts over time, you may see the lifetime value of your customers increase. At the same time, you can bolster revenue and help strengthen your brand’s image.
The following metrics are especially important to monitor so that you can develop an accurate understanding of the impact of your retention efforts.
1. Average order value
Average order value describes how much money a customer spends per transaction. It includes transactions from both new and established customers.
To understand how it relates to measuring customer retention, you must examine it in relation to metrics for purchase frequency and the repeat customer rate. Average order value is calculated by dividing the total revenue earned by the number of orders placed over a specific period of time.
2. Purchase frequency
Do your customers return to your ecommerce store to make purchases every month or only a few times each year? Purchase frequency sheds valuable insight on this aspect of your customers’ behavior.
To calculate purchase frequency, divide the total number of orders placed over a specific time period by the number of unique customers.
3. Repeat customer rate
The repeat customer rate tells you how many first-time customers you entice to make additional purchases at a later date. This rate is calculated by dividing the number of customers who’ve made more than one purchase by the total number of unique customers that your store has had for that time period.
Through a review of the aforementioned metrics, you can determine the average customer value. This calculation is determined by multiplying the purchase frequency by the average order value. Increasing your repeat customer rate can help dramatically improve the average customer value for your ecommerce store.
Ways to improve customer retention in ecommerce
Retention efforts span across the customer’s full life cycle with your ecommerce business. They begin as soon as a first-time visitor lands on your website and continue throughout the post-purchase experience.
For many ecommerce stores, a well-rounded customer retention plan that considers most or all of the following strategies will produce superior results.
1. Personalize the user experience
Customers appreciate feeling valued as unique individuals, and they often respond well to a personalized user experience. There are many effective ways to tailor a customer’s experience with your brand.
These can include sending promotions on products that are aligned with their interests and opening new email messages by greeting the customer by name. You can track customers’ responses to email campaigns and their view history on your pages to get a better idea about what interests them.
2. Begin a loyalty program
Loyalty programs are appropriately named because they offer rewards or incentives to returning customers. Incentives may include a special discount on merchandise, early access to new product releases, or other perks.
Your loyalty program might go into effect as soon as the first purchase has been completed. You can also offer progressively advanced incentives or perks. These may be based on factors like the number of purchases the customer has made or the total dollar amount purchased.
3. Engage in upselling and cross-selling
Upselling is the process of offering customers a more expensive alternative to a product that interests them. Cross-selling involves offering related products to one that the customer has already selected or is actively viewing.
While upselling and cross-selling are techniques used at the time of purchase, cross-selling can also be used once the initial purchase is complete. For example, a follow-up email thanking the customer for a purchase can include recommendations for related products that may be of interest.
4. Provide an easy check-out process
Your store’s ordering procedure should be as streamlined as possible to promote first-time and repeat purchases. Customers can easily be turned off by a lengthy check-out process. A lack of suitable payment and shipping options can also be significant deterrents.
Improving your check-out process by offering the option to check out as a guest. For customers who don’t have an account, creating one can seem like a time-consuming hassle.
The checkout process should be as consolidated as possible. Only ask for the minimum information required, and try to condense the entire checkout process to a few pages or even a single page if possible.
In addition, providing customers with an easy way to pay for purchases with their preferred form of payment is crucial. For instance, many consumers have already taken the time to set up an e-wallet or another similar payment solution. By selecting and paying through their e-wallet, they can use any linked cards or accounts.
All of these factors come together to create the best shopping experience possible. This in turn encourages your customers to shop on your ecommerce website again.
5. Give your customer service a boost
Throughout every stage of your customers’ shopping journeys with your business, they should have convenient access to customer service. One of the many ways that you can provide immediate support when it’s needed is through a live chat function.
It can be beneficial for your customers to be able to reach a live agent by phone. However, many customers also appreciate the convenience of both email and chat options.
If you have a customer service team, ensure that its members are well-trained, friendly, and empowered to resolve most issues immediately.
Keep in mind that unhappy customers often tell others about their negative experiences. Bad reviews and negative word-of-mouth advertising can lead to a poor public image for your brand and other issues that may have been avoidable.
6. Be active on social media
Connecting with your ecommerce store’s customers online is essential, and social media platforms are ideal for keeping in touch. Customers who follow your accounts on Twitter, Facebook, Instagram, and other platforms can easily keep up with news from your store.
This may include fashion tips, info about new product features, the latest promotions, personal interest tidbits, and more. When you interact with your customers via these platforms, your dialogue can strengthen relationships and improve customer service
Social media also gives you the incredible opportunity to boost your brand’s image. Creating posts on your pages is free, and these can be shared by your followers to help magnify the reach of your marketing efforts.
7. Utilize email marketing effectively
Availing of email marketing is one of the top ecommerce tips for owners of online stores, regardless of the goods that they sell.
When a new customer makes a purchase through your website, you’ll collect the customer’s email address. Immediately after the purchase, your store should send an automated yet personalized email to confirm the order.
This is also the perfect opportunity to initiate the customer into your loyalty program with a discount on the next purchase. You can even recommend a few relevant items that the customer may be interested in at that time.
Note that this is only the beginning of customer retention efforts through email marketing. If your customer has opted to receive your newsletters and promotions, you can periodically send details about products and promotions to the customer’s inbox.
You can also use email marketing to offer a special product discount or another perk if a customer hasn’t purchased anything recently.
8. Have multiple delivery and return options available
Some of your customers may have an urgent need for an item and may be willing to pay more in shipping costs to get the item faster.
On the other hand, other customers may be willing to wait a few extra days for low-cost or free shipping. By providing several options to your customers, you can meet most delivery timing needs.
You understandably want your customers to be satisfied with their orders. However, you’ll likely want to provide them with a hassle-free return process to ensure that you’re offering a stellar ecommerce customer experience.
For example, you can set up a return option on your website so that the customer can print a return label and initiate the return process.
9. Offer a replenishment program
Do you sell products that your customers need to re-order regularly? Take the hassle out of this process with a replenishment program.
After a quick setup process, the customer can enjoy regular shipments without having to take any additional steps. With an automated re-ordering process, the customer may be more likely to continue ordering from your store and less likely to shop around with others.
10. Ensure that delivery is reliable
Your customer’s full experience per transaction doesn’t end until they’ve received the merchandise and have confirmed that it meets their needs and expectations. Delivery plays an important role in this, so you need to utilize a reliable delivery method.
If you determine that a specific delivery provider doesn’t always meet deadlines and timeframes, use another provider that you can trust.
11. Incorporate gamification
The primary goal of using gamification elements is to make your customers’ interactions with your store more enjoyable and even fun. Some gamification ideas include competitions, rewards, and goals.
These can range from scavenger hunts to contests, points systems, and more. Remember to start gamifying your marketing on a smaller scale to gauge interest with your customer base. This will also help you to determine how effective different strategies are.
12. Send post-purchase questionnaires
Another great way to stay in touch with your customers after a purchase is to ask for opinions and feedback. Customers love knowing that stores care about their experiences, so sending a post-purchase questionnaire can go a long way toward establishing loyalty.
If a customer describes a negative experience, this gives you the chance to correct the problem and to salvage the relationship.
13. Cultivate a brand look that’s recognizable and consistent
Create a complete customer experience through branding. For example, your online content, packaging, logo, and other elements should all express the same theme and have a cohesive look.
This creates a sense of immersion that your customers can enjoy and remember. Customers may be more likely to make recurring purchases when a store is branded well.
14. Celebrate customers’ special days
Birthdays, first-purchase anniversaries, and other dates are important in your customers’ lives, so they should be important to your store as well. By tracking this information, you can send special discounts or other promotions to celebrate these milestones with your customers.
In addition to establishing a personalized connection with your customers through these efforts, you can show appreciation and promote loyalty.
15. Incentivize account creation
Many customers are weary of creating new accounts, and they often prefer to checkout as a guest unless they make regular purchases through a website. To encourage customers to create an account, offer a one-time discount on the current order or on a future purchase.
To simplify the account creation process, you can ask the customer to complete the process at the end of the purchase. The customer has already provided all relevant details needed to create an account, so only a password may be required to finalize the setup.
Customer retention is crucial to the success of your ecommerce store. This article has hopefully provided you with a better understanding of the many ways that you can encourage customers to return to your website for additional purchases.
Now, you can incorporate these various strategies into your marketing plan to keep your customers coming back for more!