A customer base is essential for every business, regardless of its type and size. Many small businesses focus on acquiring new customers, but retaining current customers is just as important – if not more so. After all, 65% of a company’s business comes from existing customers. Moreover, 82% of companies believe that customer retention is cheaper than customer acquisition.
That is why customer retention is crucial for all businesses, including eCommerce businesses. However, in this competitive digital world, where customers are continuously bombarded with advertisements and luring deals, retaining your customers is not an easy task.
And no matter what product you sell online and how much better it is from the other products, you can’t expect your business to grow if you can’t retain your customers. So, businesses need to implement customer retention strategies to keep their existing customers coming back and buying their products or services.
What Is The Purpose Of The Customer Retention Strategy?
Are you planning to set up an eCommerce store? Creating digital products to sell online? If so, selling your products or services online will not only help you expand your business overseas but also enhance your business ROI. However, do you know 80-90% of eCommerce businesses fail within a few years of their start?
While the reasons behind the failure of an eCommerce business are many, poor customer retention rate is the primary one. Customer retention rate (CRR) is a metric that measures the percentage of customers who continue to do business with a company over a given period of time. It has been found that improving your CRR just by 5% can double a company’s revenue.
So, before you start your eCommerce business, it is vital to have a conceptual framework of customer retention strategy to improve your CRR.
Why Is Customer Retention Strategy Important For eCommerce Brands?
The goal of any business is to make a profit, and one of the best ways to do this is to increase revenue while simultaneously reducing costs. One of the best ways to reduce costs is by retaining customers. It costs six times more to acquire a new customer than it does to retain an existing one. Therefore, by retaining customers, eCommerce brands can boost ROI and reduce their custom acquisition costs (CAC).
Boost Customer Loyalty
Loyal customers are more likely to continue doing business with a company, and they are also more likely to recommend the company to friends and family. In fact, loyal customers are worth up to 10 times more than their first purchase. By boosting customer loyalty, eCommerce brands can increase revenue, reduce costs, and boost ROI.
Acquire New Customers
When existing customers are happy with a company, they are more likely to recommend it to others. Word-of-mouth marketing is one of the most powerful forms of marketing, and it is free. By acquiring new customers, eCommerce brands can boost revenue and reduce their marketing costs and effort.
Increases Customer Lifetime Value (CLV)
Customer lifetime value is the total value a customer brings to a company over the course of their relationship with the company. By retaining customers, eCommerce brands can increase customer lifetime value and boost profits.
Focuses On Growth
Many eCommerce brands make the mistake of focusing on short-term gains rather than long-term growth. This short-term focus can lead to a number of problems, including high customer churn rates. By focusing on growth, eCommerce brands can avoid these problems and achieve long-term success.
What Are Customer Retention Strategies?
In business, customer retention refers to the ability to keep current customers happy and prevent them from seeking out competitors. A strong customer retention strategy will keep your business top-of-mind for current and future needs, increase customer lifetime value, and decrease customer acquisition costs.
There are a number of retention strategies businesses can employ to keep their customers coming back, but the most effective ones will be tailored to the specific business and its customers. So, if you are wondering what are the best customer retention strategies, you are at the right place. We have narrowed down a few customer retention strategies for your business:
Introduce A Customer Loyalty Program
With a loyalty program, customers can earn points or rewards for making purchases, which they can then redeem for discounts or freebies. Not only does this give customers an incentive to keep doing business with you, but it also helps you to collect valuable data that you can use to improve your marketing and sales efforts.
Create A Marketing Campaign
Creating a marketing campaign that speaks directly to their needs and interests can help keep your customers engaged. Whether it’s a targeted email campaign, a social media contest, or a series of personalized ads, a well-executed marketing campaign can make your customers feel valued and appreciated and encourage them to keep doing business with you.
Use Social Media
Social media is a powerful tool that can be used to connect with your customers and build relationships with them. Make sure you’re active on the social media platforms where your target customers are spending their time and use these platforms to engage with them in a genuine and authentic way.
You can also use social media to answer customer questions, give product recommendations, provide customer service, run contests and promotions, and to share exclusive deals and offers.
Use Referral Program
Everybody loves a good deal, so offer your customers discounts and coupons that they can use on their next purchase. You can offer discounts for loyalty or for referring new customers to your business. Discounts and coupons are a great way to show your customers that you appreciate their business, and they’re an effective way to keep them coming back for more.
Build A User-Friendly Website
Your website is the face of your business, and first impressions matter. If your website is hard to navigate, takes too long to load, or is difficult to use on mobile devices, customers will likely look for products elsewhere. Investing in a user-friendly website is one of the best customer retention strategies you can implement.
However, if you don’t want to invest in building a new eCommerce site from scratch, as you already have a website, Shoprocket can help you. Shoprocket is a no-code website builder tool that will turn your existing website into an eCommerce site. It offers all the features you need to build a user-friendly eCommerce website.
Prioritize Customer Service And Experience
If you want to keep your customers coming back, you need to prioritize their experience with your brand. This means offering excellent customer service and always delivering on your promises. When customers have a positive experience with your brand, they’re much more likely to come back and recommend you to others.
Personalize Communication Where Possible
In today’s age of technology, customers crave personalized experiences. They want to feel like they’re more than just a number to your business. One way you can personalize communication is by segmenting your email list. This way, you can send targeted emails to different groups of people based on their interests and needs. For example, if you have a clothing store, you could segment your list by men, women, and children.
Nurture Your Relationship With Emails
Building a good rapport with your customers is important for business success. By keeping your customers happy, you create a bond that encourages them to keep coming back. So, you can use emails to stay in touch with customers, send them helpful information, and promote your latest products and services.
Email is also a great way to upsell and cross-sell to customers. For example, if a customer buys a shirt from your store, you could send them an email a few weeks later with a coupon for 10% off a new pair of pants.
Identify Areas For Improvement
No business is perfect, which is why it’s important to look for areas of improvement. Whether it’s your customer service, product, or website, there’s always room for improvement. One way to identify areas for improvement is to collect feedback from your customers. This can be done through surveys, customer interviews, and even social media.
Create A Customer Relationship Management Strategy
A customer relationship management (CRM) strategy is a plan for how you’ll manage your relationships with your customers. This includes everything from how you communicate with them to how you collect and use their data.
Creating a CRM strategy can help you foster better relationships with your customers and make it easier to keep track of your communications. It can also help you identify areas for improvement and create targeted marketing campaigns.
Also Read: How to Sell Digital Downloads in 2023
How To Create A Customer Retention Strategy?
A well-defined and executed customer retention strategy starts with the customer and works backward. In order to evaluate the effectiveness of your customer retention strategy, you must first understand who your customer is and what they value. This will help you to identify critical touchpoints in the customer journey where you can intervene to prevent churn.
Once you have a clear understanding of your customer, you can develop key metrics to track progress and gauge success. Here are a few essential metrics that can help you to evaluate a customer retention strategy:
Customer Churn Rate
This is the most obvious metric to track, but it is also the most important. Customer churn rate (CCR) measures the percentage of customers that cancel or do not renew their subscription over a given period of time. A high churn rate is a clear indication that something is wrong with your retention strategy.
Customer Lifetime Value
Customer lifetime value (CLV) is a measure of the profitability of a customer over their lifetime. This metric can be used to calculate the amount of money a customer is expected to spend with your business over the course of their relationship.
Customer engagement measures how active and involved customers are with your product or service. This metric can be tracked via website metrics (time on site, pages per visit, etc.), social media interaction, or surveys.
Customer satisfaction is a measure of how happy customers are with your product or service. This metric is typically tracked via surveys or customer support interactions.
Net Promoter Score
Net Promoter Score (NPS) is a metric that measures the likelihood that customers will recommend your product or service to others. NPS can be calculated using a simple survey question: "How likely are you to recommend our product or service to a friend or colleague?"
By tracking these essential metrics, you will gain a clear understanding of the effectiveness of your customer retention strategy. If you see improvements in these metrics, it is a good indication that your retention strategy is working. If you see a decline in these metrics, it is a sign that your retention strategy needs to be tweaked or entirely revamped.
The Bottom Line
The eCommerce industry is extremely competitive, and businesses need to implement effective customer retention strategies to stay ahead of the competition. So, make sure you develop a great customer retention strategy and take your business to the next level.