The ecommerce industry has been growing rapidly. Thanks to
While that may open doors to many new business opportunities, it also means that there will be much more competition for consumer attention. It is becoming more expensive for brands to drive traffic to their online stores, let alone convert online shoppers into
As a result, most ecommerce businesses are refocusing on customer retention. Increasing customer retention by 5% has a high chance of increasing your profits by 25% to 95% because consumers are already aware of your brand value.
In this article, we will look into seven highly effective customer retention strategies that you can implement immediately. Let’s dive in!
What Is Customer Retention in Ecommerce?
Customer retention is the process of
Why Is Customer Retention Important for Ecommerce?
Prioritizing customer retention and striving to provide a valuable customer experience has the following advantages:
Higher Average Order Value
Average order value (AOV) refers to calculating the average amount a customer spends while making a purchase from your store.
One may ask what the correlation is between the average order value and customer
Understanding and evaluating your company’s average order value sets the benchmark for consumer behavior and helps you in selecting appropriate pricing strategies to reduce attrition.
The average value of US online shopping orders is generally higher on desktop than mobile devices (Source: Statista)
Increased Profits
Once you have a loyal customer base, upselling or
Fun fact: returning customers are known to spend 67% more than new ones. Therefore, higher customer satisfaction means recurring revenue and increased profits over time.
More Word of Mouth
One of the cheapest and most powerful marketing strategies is word of mouth. Your customers are actually your number one influencers.
People trust people. So when your customers are happy with your products, they share it with their friends and family or publish product reviews online for the world to see. It is free, powerful, and the best way to keep and attract
People are much more likely to purchase a product with great customer reviews
More Cost-Effective
Inflation has, of course, increased the cost per click for paid search ads while the conversions have dropped. Customer acquisition (attracting new customers) is now five times more expensive than retaining existing customers.
Staying in business with existing customers by personalizing their experience, understanding their needs, and providing outstanding customer service, is cheaper than onboarding new customers.
How Do You Calculate Retention Rate, and What Is the Average?
The formula to calculate your customer retention rate is very simple. First, divide the total number of customers from new customers by the acquired number of customers at the start of the period. Here’s what it should look like:
Customer retention rate = (Total no. of customers at the end of the period — No. of new customers acquired) / No. of customers at the start of the period
The customer retention rate in ecommerce is around 38%, but the tech giants like Amazon have managed to score close to 90%, given its renowned popularity.
The primary benefit of ecommerce is its advantage over other industries to shape offerings digitally and adapt to trends quickly — saving customers’ time, offering easy purchasing, and retaining buyer interest.
Average customer retention by industry (Source: Exploding Topics)
7 Smart Strategies for Ecommerce Customer Retention
While there is not only one way of approaching customer retention in ecommerce —we recommend looking into the following strategies:
Set up a Gamified Loyalty Program
We all know that games are super addicting. Even more so when we can win customer credits or discounts on our favorite brands and products. And your customers feel the same way.
Gamified loyalty programs in ecommerce keep your customers engaged and make an otherwise dull shopping experience thrilling and rewarding. You attract higher engagement, site visits, and repeated purchases by hosting
Brands that gamify their loyalty programs as part of their customer engagement strategies have increased brand loyalty by 22%, with a 47% rise in engagement. These numbers are a sign that it may be time to embrace the gamification of loyalty programs.
Some excellent gamified loyalty programs you could offer are
For example, Starbucks has a structured rewards program, and its members can win exclusive prizes by playing games:
If you’re selling online with Ecwid by Lightspeed, you can gamify your marketing with apps from the Ecwid App Market, such as Scratch & Win Promotions or Discount Spin Wheel of Fortune.
Make Communication Easy for Customer Support
One of the main reasons for high customer churn rates is not offering
Imagine this: a customer purchases a laptop from your store and requires immediate assistance regarding the device’s charging capability. Who do they turn to?
Considering the urgency, an email is not the ideal communication channel. Instead, they might place a phone call for a quick resolution.
Therefore, to make communication seamless, you must set up omnichannel customer service around various touchpoints. An omnichannel platform makes it easier for your customer to find you and get their queries answered in their preferred channel, whether that’s through emails, phone calls, social media, or messaging apps.
Customer retention rate with and without omnichannel customer service (Source: Invesp)
In the case of complex products such as software, expensive hardware, or items that require a walkthrough for set up, setting up a call center is a perfect remedy to satisfy customers by understanding their concerns and offering seamless support 24/7 with a personalized human touch.
Check out ways to provide
Personalize Communication Across All Channels
Your customers might not be from just a single demographic, such as an age group, location, or gender. Even if they are, every customer’s interests will always differ from the next. So, if you’re sending out generic sales messages with zero personalization, your customers will lose interest in your business sooner than you realize.
It is critical in ecommerce to allow your customers to identify with and relate to your brand so that they will continue to do business with you. Providing individualized communication and customer experiences is a guaranteed method to keep customers happy and loyal.
Here’s how you can include personalized communication across every channel:
- For emails, send personalized emails that do not just stop after addressing them by their names. Offer product recommendations by analyzing their purchase history, or send customized offers for their birthdays or anniversaries.
- Offer innovative services, such as
try-and-buy services on apparel or accessories, provide consultations, etc. - Target customers with abandoned carts and provide customized offers to close the sale by sending coupon codes over SMS or email.
Saw a customer eyeing a product? Here’s an example of an ecommerce store sending personalized reminders and a discount code for the browsed items that are now back in stock:
Ruggable reminds customers about deals on items in their carts
If you sell online with Ecwid by Lightspeed, you can send personalized offers with automated marketing emails and ecommerce newsletters.
Implement a Customer Feedback Loop
How would you make your offerings
Customer feedback is the core of retention and portrays transparency. It gives you a clear picture of whether your customers will continue purchasing from your store or not.
And you should not limit such feedback to chasing product reviews. Let your customers share their shopping experiences and be open to suggestions.
The most effective ways to obtain customer feedback are by using surveys like CSAT (customer satisfaction) scores and NPS (net promoter scores), asking for product reviews on your site, and requesting to share shopping experiences. Or, if you have a call center, you can request customer feedback at the end of each conversation.
Your customer feedback loops do not end after receiving them. To ensure there’s appropriate action taken, you need to share it with your teams.
For instance, feedback obtained after phone conversations can help train your support agents better. And feedback received on specific products can be shared with the development team to highlight product flaws and minimize errors.
Discover all the ways to collect customer feedback for your Ecwid store in our Help Center.
Create a Community and Become a Lifestyle
The dictionary defines a community as a unified group of
The community approach to shopping encourages your customers to return to your store. Individuals who relate to your mission are more likely to be a part of your community for years to come. Your products will eventually become a part of their lifestyles. Forbes explains how creating a strong community can help you improve your average order value.
Do you know what else is great about an online community? Your community members become influencers, talking about your business and promoting it on social media, resulting in a larger audience interested in checking out your items.
For example, Gymshark has an online community known as the “Gymshark family.” The community lets its customers showcase Gymshark’s fitness products on its website and social media, be a part of fitness events, get exclusive access to offers, and more. It’s really awesome!
You can build a community by introducing customers to a branded hashtag that allows them to share their experiences on social media. Alternatively, you could ask them to join an exclusive group on social platforms like Facebook, or messaging apps like WhatsApp or Telegram, where they can connect and be notified of exclusive benefits.
Create Valuable Content
Although promoting your product to ensure a consistent revenue stream is essential, too much of it is not good. Start creating valuable, informational content to avoid going overboard on promotional content, such as product recommendations, discounts, etc.
The trick is to have the right mix of promotional and informational content to attract and educate customers about their purchases without seeming too pushy.
Here are a few content ideas for inspiration:
- Create a free lookbook if your store sells fashion apparel and accessories. A curated lookbook gives users an idea of
product-pairing and styling outfits. - Blogs help portray your brand as an expert in the field. Create a blog for your website and curate posts based on your targeted customers’ interests. For instance, if your store sells plants, you could create a blog around the best indoor plants and top tips to care for them.
- Send newsletters around trending topics relevant to your store and your customers.
- Offer access to premium content, like videos, interviews, etc., by professionals in a related industry, such as fashion or interior designers.
Myntra, for instance, has an exclusive “studio” with a variety of content for customers looking for some fashion inspiration:
Showcase Your Brand Story
With
However, with online shopping, customers have lost the human connection and perceive brands as being
You can highlight your brand story (behind the scenes of the what, why, and who), talk about your values, and add your struggles and mission through an about us page.
An example of the “About Us” page by Allbirds
Alternatively, you can create a series of videos with similar content to share on your product pages, social media profiles, or even in your emails. This format is also much more engaging than a static block of text.
The Bottom Line
Customer satisfaction is the key to retention. And the only way you can satisfy your customers is by listening to them. Communicate with your customers, offer them individualized experiences, make it easy for them to reach you, and get to know them better with each sale.
Remember that retention strategies need to go beyond giving
Once implemented, ensure you continually monitor responses to these strategies and optimize them for the best engagement.
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