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How To Increase Customer Retention In E-Commerce (5 Best Practices)

How To Increase Customer Retention In E-Commerce (5 Best Practices)

Renata Liubertaitė

Any sale from a new customer is great, yet what’s even better than that is a purchase made by someone who has already bought from you before.

People who keep coming back are the driving force for every business and by no means should be taken for granted. Hence, strengthening relationships with new customers should be one of your top priorities from the very first point of contact if you want to see them in your store again.

The reason for this is that – and you’ve probably heard it before – acquiring a new customer can be a few times more expensive than retaining the existing one. You might be putting all that time and money just to never see them ever again, thus earning less than you’ve spent to get that one sale.

To avoid this from happening, let’s go through some best customer retention strategies and see what can be done to maintain healthy retention rates that can lead to overall business growth.

The real value of customer retention

Customer retention: definition and benefits

If you’re not familiar with a term itself, let’s start by defining what is customer retention.

Customer retention is a series of various actions that businesses do to boost the number of repeat clients and improve their lifetime value. It means that companies want to extend the relationship with a client for as long as possible, turning a one-time shopper into a loyal customer who keeps bringing them profits.

Already mentioned cost-effectiveness is not the only reason to work towards customer loyalty and retention. Here are some other whys that put an emphasis on retaining clients.

Higher conversion rates

Selling to existing customers is simply easier than selling to someone who has never purchased from your store. If they’re satisfied with the experience you provide (and if they keep coming back, they most likely are), you already have their trust, they know what to expect, and that is why they need less convincing. In fact, while the chances to sell to an existing customer are 60-70%, the probability of selling to someone new is only 5-20%.

Increased average order value

Not only it’s easier to sell to return customers, but they also tend to spend more with your brand over time. They’re usually curious to try new things along with your improvements, it’s also easier to cross-sell and upsell to them, which brings us to the following…

Higher revenue and profits

As a result of higher conversion rates and increased AOV, companies are able to boost their revenue by taking good care of their repeat customers. Researches show that brands that manage to increase customer retention by, for instance, 5% can expect at least a 25% increase in profit.

Positive word-of-mouth

Finally, customer reviews and feedback cannot be underestimated since 88% of shoppers rely on them as much as personal recommendations. Repeat customers are mostly happy about their experiences with a specific brand and tend to share them with others, a.k.a. your potential customers.

However, many companies still tend to focus and spend more on acquiring new clients than nurturing the relationships with the customers they already have. Here are 5 effective customer retention strategies you should try to avoid being one of those.

5 customer retention strategies to start with

1. Ensure a smooth shopping experience

Increase customer retention by ensuring a smooth shopping experience

First things first, without all technical things in place, no client retention strategy can probably bring the desired results. To turn a website visitor into a customer, a company has to create a smooth shopping experience, which is what the people expect.

For instance, such issues as problems navigating the website have previously encouraged 48% of customers to leave the online store and take their business elsewhere.

So before getting your hands on marketing and communication, consider the following key performance aspects. All of them are highly important from the user’s perspective, which also makes them crucial for ranking on Google:

  • Website navigation. As finding everything fast is the top-priority among site visitors, make sure there’s a conveniently placed search-bar, your products are sorted into categories, it’s possible to filter them based on specific criteria, etc.
  • Website loading times. 47% of shoppers expect a website load in 2 seconds or less, which says a lot about how serious you have to be about performing speed tests once in a while.
  • Mobile-responsiveness. Since a lot of people shop or at least search for ideas using their smartphones, a mobile-friendly design is a must for a seamless experience.
  • Error-free checkout. This is one last step to achieve the goal, keep it simple. Simplify the forms, allow auto-fill, offer multiple payment options, and a guest checkout.

By letting customers shop effortlessly, you’re increasing their satisfaction and your odds to improve customer retention.

2. Stay on your customers’ radar

In an ideal world, providing a frustration-free shopping experience along with a decent product would be enough. However, you should put a little more effort into your customer retention plan by reaching out via the channels they use the most.

The dashboard of Senderium - SMS marketing app for Shopify

Email marketing

Email newsletters are still one of the most popular ways for retaining customers. They’re great for various product updates, tips, recommendations, etc., which can noticeably boost customer engagement, remind about the presence of your company, and gently nudge them towards making another purchase on your store.

SMS marketing

Sending SMS messages to your customers is one the fastest ways to get noticed (thanks to their high open rates). However, many companies still haven’t discovered the benefits that SMS can bring, which can help you stand ahead of the competition. With the right SMS marketing tools, you can use text messages for many different purposes, from promotions to best wishes on special occasions.

Social media

Social media platforms offer many different ways to stay visible and connect with customers even if they’re not planning to purchase anything soon. You can show your brand’s unique personality, present the people behind it, organize contests, and so on, which can entertain and make customers feel emotionally closer to your business.

3. Ask for feedback and take it seriously

Collect customer feedback to show that you care and increase retention

It might be difficult to look at the business from the owner’s perspective, not to mention barely possible to experience the same that your customers do. But you can always ask how they feel about the way your company operates, and what can you do to make it better.

There are many ways to do this, including:

  • Email surveys
  • Sending an SMS message with a link
  • Asking for feedback in-app or on-site
  • Reaching out over the phone
  • Asking personally, etc.

If you’re not sure which method to use, you can always try to vary between several different ones over time. Different types of feedback requests can give you more valuable insights as well as diversify them to your customers.

What’s important to keep in mind is that you will not be able to solve every single issue that comes up. Look for trends – something that many or most of the people bring up. This is what you may want to fix since it's becoming an issue for a lot of your customers.

Acting on feedback can not only show your customers that you care about their opinions and are willing to improve but can be a valuable source of learning, especially if the feedback you get is not so pleasant. Seeing this, customers might give you another try, and this slight possibility for retaining them is much better than nothing!

4. Provide an excellent customer service

74% - this is how many customers base their purchase decisions on customer service alone. This is way too big of a number to ignore since it makes great customer service directly related to healthy customer retention rates.

Reliable customer service can boost customer retention rate

Out of the many things that customers actually want, fast, reliable, and convenient customer support ranks at the top of the list. This might sound obvious, yet it’s much harder to achieve than it is to think of it.

To be able to efficiently communicate with clients and deliver the experience that they deserve, businesses need two things:

  1. a dedicated team with the right customer service skills
  2. and a decent support system to handle it all. This can be anything from various CRMs to help desk ticketing systems.

Such tools make it easier to stay organized, allow to learn more about customers faster, save time by collecting all the requests in one place, etc., thus allowing to solve complaints more effectively. Thorough support, as a result, can boost customers' trust in a brand, proving to be one of the most effective customer retention tactics as well.

5. Reward loyalty

Customer retention and customer loyalty go hand in hand. A satisfied customer tends to stay loyal, and loyal means that s/he prefers one brand over the other, repeatedly.

If you already have such customers, don’t take them for granted - losing them can be much faster than turning them this way. So besides trying the customer retention strategies mentioned above, consider building a customer loyalty program. It may help you ensure that those who keep coming back know how important they are.

Loyalty programs: the driving force for new sales and increase customer retention

The next thing would be to decide what loyalty program would fit your business best. There are many different types of them so coming to a decision might not be so easy. For example, point and spend programs are pretty common ones since they’re the simplest to implement.

The main goal of the point program is to get points with each purchase that can later be used as a reward. As for the spend program, the more you spend, the more credits you get – as simple as that.

Such programs alone can be the driving force for new sales – some shoppers can get so invested in those that the points tend to become their main focus. Yet it shouldn’t be yours. Build loyalty programs to reward your repeat customers for being with you, and aim at providing real value rather than just a kind of game to show off.

Improve customer retention for business growth

The connections you’ve already built with your customers are one of the most valuable assets that your business has. As with any relationship in life, business relationships cannot be overlooked or forced into working.

It's a process that requires patience and consistency but is truly rewarding when done right. Taking good care of repeat customers by using various customer retention strategies is one of the best things you can do to impact your business success – and in a very positive way.