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What is the best customer retention strategy for eCommerce?
One of the best customer retention strategies for eCommerce is creating a personalized customer experience. This means tailoring your offerings to each individual's needs and preferences. By doing so, you show them that you care about their specific needs and wants. This can lead to greater customer loyalty, which is important in a competitive marketplace.
Wherever you are on your eCommerce journey, ask yourself, “Do I have loyal customers?
Would they go to bat for my brand and defend it when there are trolls trying to discredit us on social media?
If not, then you might want to read on.
Loyalty is vital in all kinds of relationships.
It builds strong bonds that last a lifetime—whether it’s with family, friends, a romantic partner, and yes, even a brand.
Fostering brand loyalty and maintaining relationships with customers is very important for long-term business success. Loyal customers spend more, and they will advocate for your brand.
When they love your products or services, customers would want their family, friends, colleagues, and social media acquaintances to support your brand as well. So how can you induce this influencer-level championing from the people who buy from your brand?
It takes time, commitment, and effective customer retention strategies to build these mutually beneficial relationships.
There are so many layers to eCommerce businesses, which means there are several ways to optimize customer retention. You need effective and workable strategies to make customers want to come back for more, and that’s exactly what we’ll be covering throughout this article.
What is customer retention?
Customer retention is a simple concept—it is a brand’s ability to retain customers over a certain period.
Customers return to a brand multiple times for various reasons: they are satisfied with the products or services, exemplary customer service, or an overall satisfactory experience at multiple touchpoints. Remember, the success of any brand lies largely on its customers. This is why companies spend a lot of money and effort enticing their target audience to become paying customers.
But acquiring customers is only the first step. It’s important to retain as many of them as possible for long-term success. According to research, 44% of companies focus on customer acquisition, and only 18% prioritize customer retention. This is likely because it’s so much harder to sell to a new customer—it is just 5% to 20% compared to 60% to 70% when selling to old customers.
The same study notes that with just a 5% increase in customer retention rates, there will be a profit increase between 25% and 95%. These are incredible numbers that can take your business to the next level without spending so much each time to acquire a new customer.
There’s no doubt that efficient customer retention strategies will help drive profits.
Importance of customer retention strategies
Customer retention is a crucial eCommerce metric that tracks business performance and success. A customer’s journey doesn’t end with the purchase of a product or the payment of a service. It must continue with the goal of encouraging them to buy from your business repeatedly, so often that they become advocates for the brand.
Here are some of the reasons why you should invest in customer retention strategies:
- Customer retention is more affordable and drives more profits than customer acquisition.
- It is easier to sell to an existing customer than a brand new one.
- Effective customer retention strategy breeds long-term loyalty and advocacy.
- Loyal and satisfied customers will personally recommend your brand to their social circles and increase word-of-mouth.
- Customer lifetime value will increase.
- Customer retention drives consistent, long-term profits.
- Loyal customers will provide honest, actionable feedback.
Who benefits from customer retention?
The obvious answer is your brand. When you deploy customer retention strategies right, you will earn more profit. But what follows is a chain reaction that spreads to others.
Check out the other beneficiaries of customer retention:
- The company will enjoy higher profits at a lower cost.
- Loyal customers will enjoy promos, rewards, and better overall experiences—all of which are essential elements of customer retention strategies for eCommerce.
- Competitors are challenged and will try to improve their offerings, which benefits their customers.
- Marketing teams are buoyed as loyal customers become organic spokespersons for the brand.
- Company culture will also improve—a customer-centric mindset naturally expands to service-oriented measures that benefit employees. The brand’s success also leads to happier workers.
- Customer service teams have better resources to provide the best possible assistance for all customer concerns.
Best customer retention strategies for eCommerce
There are 2.64 billion online shoppers worldwide—around one-third of the global population. Brands need to develop the best eCommerce strategies to take a chunk of the online shopping market, which steadily generated around $3 trillion each year since 2019.
Customer retention strategies are crucial in the overall brand approach. Here’s our list of the most effective customer retention strategies for eCommerce and the brands that are known for them:
1. Create a strong onboarding experience
As with forming any new relationship, first impressions matter. A good brand will always prioritize customer convenience. Put yourself in your audience’s shoes and think about an onboarding process that will encourage you to keep coming back.
How to implement this program
- Keep the signup process brief and simple.
- Make the process easier with an option to sign up with their email or social media accounts.
- Send a short and engaging welcome mail to thank them for signing up.
- Provide brief and simple educational materials or create a knowledge base that that will help customers navigate the product or service.
- If possible, include an introductory promo or discount in the welcome email.
- Send a follow-up email with helpful resources about relevant brand offerings.
Why it works
In eCommerce, you need to make the best possible impression right off the bat. A good customer onboarding process welcomes them as members of the community and educates them about the product and how to navigate the brand system.
It doesn’t take a genius to realize that with eCommerce, simplicity is key. Consumers want a quick, no-frills path to purchasing a product or signing up for a service.
In brick-and-mortar stores, the staff is on-hand to help with the onboarding process. Digital products are a bit more complicated—instructions must be easy to understand and UX design must be simple and navigable.
Successful example: Amazon
Amazon is the biggest eCommerce company in the world. It has everything shoppers would ever wish to buy or access online, and the platform also has a simple, hassle-free onboarding process. It’s just a matter of signing up—you don’t need to enter too much information. With just your name and email address, you can start shopping. Amazon will learn about what you are interested in through your browsing and buying patterns.
2. Personalize their customer experience
In the digital age, personalization is a basic customer expectation. This doesn’t just mean using customers’ first names in email newsletters. It’s about demonstrating that the brand knows the customer on a personal level and is eager to provide exactly what they want. Personalization is about the overall customer experience and must be deployed on all touchpoints.
How to implement this program
- Send personalized emails. It’s not just about putting their first name on the salutation but also knowing what to send them and when. Start with a customized greeting on their birthday or their anniversary with your brand.
- Leverage customer behavior data, browsing habits, and other engagement metrics to enhance the individual experience.
- Cross-sell related products or services or upsell through email marketing. The featured products and services must be based on what the customers are interested in.
- Send follow-up emails based on what you think customers want, e.g., promos for products or services they have browsed before, upcoming sales for previously purchased items, and informational content relevant to their interests.
- Reply to queries as quickly as possible and keep customers apprised as you resolve their complaints.
Why it works
A customized shopping experience replicates the feeling of being cared for by the staff in a brick-and-mortar store. Catering to individual customer needs is one of the best ways to ensure their loyalty.
Successful example: Netflix
Netflix is one of the best in the game. It recognizes that multiple people may be using one account and silos the experience for each watcher. Customers can log into their profile and easily pick up and continue watching where they left off. Its recommendation algorithm is one of the best in streaming and pushes related movies and TV shows on the main menu and after each film or TV episode.
Netflix is also excellent at predicting what watchers are looking for based on the keywords used in the search. The platform also sends regular emails to inform subscribers if a film or series they want to watch is available for streaming.
3. Close customer feedback loops
Many companies ask for customer feedback but don’t do anything about it. It’s quite rude, don’t you think? A lot of customers think so! If a customer takes the time to give you their honest thoughts, your brand should close the loop. According to a survey, 80% of customers feel emotionally connected to a brand when it can solve its problems. Closing the feedback loop will lead to loyal customers and a possible long-term connection.
How to implement this program
- Acknowledge and thank customers for providing feedback.
- Centralize your feedback location to easily track and prioritize information.
- Address urgent issues immediately.
- Inform customers about the progress of complaint resolutions.
- Apologize when necessary.
- Set customer expectations when it comes to solving their problems. If you can’t do it immediately, set a specific timeline for your subsequent response and get back to them as quickly as you can.
Why it works
Closing the loop means letting the customer know that their feedback has been used to improve the product or service.
To do this, leverage tools that will help you collect and evaluate all evaluations. This involves prioritization, organization, and segmentation. Track down the most common complaints and address them immediately.
Successful example: Grohe
German plumbing fixtures manufacturer Grohe didn’t think they had to be digitally savvy to sell construction materials. However, as market shares declined, management realized they needed to do something. One major change was improving customer relations, which included soliciting feedback from loyal customers and then closing the loop.
Grohe made it a priority to continuously learn from their customers—what they think the company is doing right and what needs to be improved. Following the changes, Grohe’s Net Promoter Score, which measures the loyalty of a customer base, increased by 20%.
4. Send engaging and informative newsletters
Email newsletters are an excellent way for customers to keep up with what’s going on with your brand. You must deliver valuable content to keep them subscribed and engaged.
How to implement this program
- Content must be 80% to 90% educational and 10% to 20% promotional.
- Be creative with your newsletter design but keep it simple. It should be responsive so it can be read on any device.
- Make sure all email subject lines are catchy and attention-grabbing.
- Always end with a convincing call to action.
- Make it easy for people to unsubscribe. This will ensure your email newsletter will not end up in the spam folder.
Why it works
A regular newsletter (monthly, quarterly, or biannually) is an excellent way to stay in touch with your customers. However, make sure the content is meaningful and relevant to the recipients. Customers who are subscribed to your newsletter are interested in what you have to offer, so include regular sales, new product offerings, and seasonal deals. You can also highlight a relevant product or service and describe its value.
If your content is consistently engaging and delightful for them, they will not want to opt out of your newsletters and instead engage with each one they receive. Track your email marketing metrics to ensure your newsletters are clicking.
Successful example: Penguin Random House
Penguin Random House newsletter subscribers are obviously readers. But with so many books released every week, Penguin uses segmentation to predict what customers prefer reading based on their previous purchases. This also keeps them engaged. The publisher also has a preference center so that customers can choose what type of marketing content they want to receive.
5. Provide amazing rewards
Loyal customers must be rewarded, don’t you agree? Rewards are also an effective way of enticing repeat purchases. Reward your most loyal customers with better incentives for spending more.
How to implement this program
- Create a tiered system, so higher-spending customers enjoy better and more sought-after rewards.
- Establish a loyalty card scheme where customers are rewarded for purchasing low-value items multiple times. You can offer the item for free when they buy it for the nth time.
- Offer free items for customers purchasing multiple products totaling a certain amount.
- Offer loyal customers exclusive deals to purchase popular products or services.
- Team up with non-competing but complementary brands for reciprocal discounts.
- Organize a special event for your most loyal customers—a free concert, dinner, or a preview of what’s to come for the brand.
Why it works
It’s all about making loyal customers feel special and appreciated.
Offer loyal customers straightforward giveaways, discounts, loyalty cards, rebates, and first crack on sales and other brand promotions. You can also send out exclusive invites to events.
Successful example: Nike
Nike is one of the top 10 brands with high customer loyalty engagement and for good reason. Its loyalty program is one for the books and has been emulated by other top brands. The brand offers many special collections that only community members can access. They also provide access to high-demand products to their most loyal customers before they are available to the general public. About 75% of Nike’s repeat buyers say they stick with the brand because of these incentives.
6. Offer convenience
Convenience saves time and effort, which is why it’s a great marketing and customer retention strategy. Identify pain points throughout the customer journey and provide practical solutions to make life easier for your audience. This will give customers more reasons to stick with your brand.
How to implement this program
- Offer self-service options when customers are at a brick-and-mortar store.
- Ensure that your business is accessible at all times.
- Provide practical options for pickup and delivery.
- Keep live chat and other communication channels open 24/7.
- Offer flexible payment options.
Why it works
All businesses should provide the utmost convenience to their customers. Convenience especially is critical for eCommerce success, as more and more shoppers seek instant gratification.
Successful example: Starbucks
Starbucks is the picture of customer loyalty. Its coffee products are not cheap, yet people line up in droves every day to get their caffeine fix. The brand has an eye on what its customers need, which is why it launched the Starbucks Mobile Order and Pay feature. Customers can order via the app and just pick up their drinks and pastries when they get to the coffee shop.
7. Associate yourself with a good cause
Modern consumers are much more discerning when it comes to the brands they support. It’s not enough that a brand offers great products; it must have positive values, too.
How to implement this program
Consider your brand story and what your company stands for. Do not just craft values for the sake of marketing—audiences have become very adept at identifying when they are being pandered to.
- Institute more sustainable applications in the manufacturing of goods or delivery of services.
- Educate customers about important values, such as climate change and other social issues prevalent in your community.
Why it works
According to research, 80% of customers prefer to buy from brands with values that align with their own.
In 2023, many brands have shifted to sustainable and environmentally friendly practices because of their emerging prevalence in the greater culture. And you have likely heard of brands getting canceled for their history of racism, abusive practices, or poor labor practices.
Successful example: TOMS
TOMS doesn’t just make comfortable shoes; it also funds mental health access to people who need it. One-third of TOMS’ profits are used for grassroots campaigns and community organizations that provide sustainable change. The brand is also committed to creating more environmentally-friendly products and packaging.
8. Stand out with unique products or services
Every brand aims to stand out and by doing so, you already have a competitive advantage. And if you keep standing out, you will have a loyal following for years to come.
How to implement this program
To stand out from the competition, you must focus on brand creation. All elements of your branding must stand out, from its name to products and services and mission and vision.
- Perform market research and identify product or service gaps that your brand can fill.
- Maintain confidence in your brand.
- Don’t be afraid to try something new as long as it is aligned with the brand’s niche and values.
Why it works
Standing out amidst tough competition is a crucial consideration before launching any product. As long as you can ensure this, your customers will keep coming back. You must stay ahead of the game and continue to improve your brand offerings.
Successful example: Apple
No matter how expensive the iPhone gets, dozens of people will continue to queue overnight to be the first to get their hands on the latest iteration. Even after decades, Apple products remain the cream of the crop. The brand listens to its customers and continuously improves its products.
9. Evoke positive feelings for your customers
Everybody wants to be happy. If your brand makes people happy, then you will have loyal customers for life.
How to implement this program
A positive marketing campaign will help customers feel good vibes when they think about your brand.
Create fun, engaging campaigns that make people smile.
Send thank you notes or emails to customers just for being part of your community.
Why it works
When customers are happy with your brand, they will be more inclined to support you. Plus, loyal and happy customers are more likely to become unpaid spokespersons.
Successful example: Coca-Cola
Coca-Cola has found unparalleled success in branding—many people say they want to drink Coke when they really mean they want any kind of soda or soft drink. One of Coke’s most famous campaigns is the “Open Happiness” project, which displayed smiley faces on cans and bottles. Its memorable Christmas commercials are also a surefire way of making customers, especially children, eager to engage with the brand.
What type of customer retention strategy is right for you?
You must make these general strategies suit your brand and target customers’ needs and preferences. A customer-centric approach is crucial—treat this relationship like an emotional connection instead of a simple transaction.
Think about your company and which one of these customer retention strategies fit your company values and goals. There may be multiplied strategies you can implement so don’t be afraid to run your company through the list and ask yourself if each one is right for your company.
Customer acquisition is crucial, and this connection requires constant tending for long-term success. Each acquisition must be followed up with workable and effective customer retention strategies to foster loyalty.
Loyal customers eventually become advocates for the brand and recommend it to family and friends through word of mouth or posts on social media.
If you have any questions about customer retention strategies or anything else eCommerce-related, contact our 24/7 customer support team.
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