7 Customer Retention Tips To Grow Your Online Business

Introduction

If you own or manage an online business, you simply can’t ignore customer retention.

The ecommerce landscape is highly competitive, with average conversion rates hovering around 2.5-3%. And it’s getting more challenging with time.

If you don’t invest in customer retention, you’re leaving money on the table.

Why?

Stats reveal that retaining customers is 6-7x cheaper than acquiring new ones. That makes so much sense because marketing spend is lesser, and customer trust & brand awareness is already present.

A smart business owner can’t avoid these benefits. If you want to achieve them you are in the right place.

Here, we’ve covered the benefits of customer retention and 7 tips that will help you with your store’s growth. Let’s get down to growing your ecommerce store right away!

Why is it Worth Pursuing Existing Customers?

It’s a general assumption that people would understand the importance of having a customer retention strategy in place. Surprisingly, many businesses still don’t encash this money-making opportunity.

Stats show that only 40% of businesses have equal focus on customer retention and acquisition. On top of it, 44% of businesses don’t even calculate their customer retention rates (CRR).

That’s so much cash left for competitors to hunt. Businesses with poor or no retention strategies are hurting their revenues.

Here are some reasons why winning back existing customers is worth it.

Increased CLV	Customer Lifetime Value (CLV) means a customer spends more with your business in the long run. This gives you a high ROI because the costs of customer acquisition (CAC) go down significantly after 1st purchase.
Targeted Approach	Retaining strategies give you valuable insights into customer behaviour which can help formulate your targeting strategies. With time, your efforts to win back customers will reduce significantly.
Recurring Revenue	Depending on what you sell, you can promote subscriptions and loyalty programs to get recurring revenue. This makes your cash flow more steady and you can make more reliable business strategies.
Upselling Opportunities	Once someone becomes a customer, you have the chance to sell more products to them. Something complementary or making a customized package for them. This is also a great technique to clear out your stocks.
Free Marketing	People are happy to refer their friends and family to businesses when they have a positive experience. By making customers loyal via customer retention, you can get more referrals which means more business with almost zero acquisition cost.
Loyalty For Life	Loyal customers are a jackpot for businesses. About 60% of consumers in the USA say they’d be loyal to their favourite brands for life. Even more surprising, 39% of consumers are willing to spend more with their favourite brands even if the product is available for a lesser price somewhere else.

The benefits are many. The list can be longer. The bottom line is that there’s lots of money to be made by strategically retaining customers.

Just to give you an idea – small businesses can generate an average of 35% revenue just from 5% loyal customers. Now that you know what value it holds, let’s see 7 things that actually work at retaining customers.

7 Tips to Increase Customer Retention

Whether you want to improve customer retention or implement new strategies for it altogether, these 7 tips can inspire you. Use them as guidelines to craft your customer retention strategies.

Customize them according to your budgets, plans, and resources. If you want high-level assistance with CRO, you can reach out to us.

That said, here are the 7 tips you need to boost your retention rates!

Make the First Interaction Memorable

First impressions matter – in the ecommerce world, they matter a lot. So, plan retention from the first step.

There’s a 27% chance that someone will purchase again after they do it the first time. By making a solid first impression, you get more people in the net and increase the probability of retention.

Here are some quick tips to do that:

• Establish trust by displaying social proof on your website
• Customize the UI/UX of your store for a pleasant experience
• Make checkouts easier – guest checkouts make a great impression
• Be transparent with your costs – checkout cost should be the same as description

To grow your store, play the long game – acquire customers with the goal of retaining them from the get-go.

You can even offer flash discounts in exchange for their contact information. That way, you can easily approach them in the future.

It’s easy for Shopify users to make cool & engaging flash discount popups with Wizpop to get customer data. With this strategy, you’ll start on a positive note and have the details to build future relationships with customers.

If your first interactions and impressions are right, you’re set to increase the retention rates.

Pro tip : Offering discounts for second purchases helps boost retention rates easily.

Customer Service Matters

We can’t emphasize this enough – poor customer service can kill your business.

If customers don’t like how they are treaeted, they’ll not purchase from you even if you offer the best rates. Quick stat – 90% of customers are likely to buy again from you if they feel valued by the service you offer.

Investing in customer support to do your business a favour. Your retention rates will significantly go up. Here are some suggestions:

• Train your team well about the product and interacting with the customers
• Shorten response time – 50% of customers get annoyed with long hold times
• Take customer feedback to make customer management strategies
• Offer some sort of discounts or rewards for genuine complains

Treating customers right can be a game-changer for many ecommerce businesses. Be a customer-first business and you’re set to increase retention numbers.

Roll Out Limited Time Offers

“20% off on the cat food if you purchase in the next 5 hours”

“Buy 1 get 1 free on all your favourite lunch deals for the next 3 days”

“Seasonal Clearance: Up to 50% Off – Free Shipping on Orders Over $50”

Limited-time offers (LTO) create a FOMO and people are likely to buy from you. Of course, it takes a targeted approach and exciting marketing message to motivate a purchase.

But, missing out on LTOs can be a huge mistake. Studies show that LTOs can make 64% of consumers make a purchase that they otherwise wouldn’t have. That is a large number to ignore.

Caution – Don’t overdo LTOs. It’ll look like fake urgency and it’s seen as a gimmick.

Leverage Email Marketing

Email marketing is a great channel for customer acquisition and retention alike – used right, it can grow your business significantly.

There’s a reason why 90% of marketers in the USA use it as a retention channel.

It’s not just a tool to share promotions – with the right messaging, you can use it to turn your business into a brand. You can even use it for surveys and get customer feedback.

Some email marketing suggestions to boost customer retention:

• Send personalized recommendations based on purchase history
• Birthday emails/promotions to build brand loyalty and enhancing the experience
• Abandoned cart reminders to bring back shoppers who left after building a cart

Depending on your business, you can also send newsletter emails to assist customers and teach them more about your business/product. Provide valuable content, tips, and updates to keep customers engaged.

Referral & Loyalty Programs

Loyal customers are far more valuable for businesses than one-time shoppers.

Depending on your products and industry, plan out loyalty programs and referral benefits to make people stay with you.

Loyal customers are basically brand ambassadors who bring in new customers at almost zero CAC. But when you incentivize their loyalty, they’re even more motivated to purchase from you.

Don’t miss out on loyalty and referral programs.

• Offer redeemable rewards
• Early access to loyal members
• Surprise offers exclusively for the loyal club
• Encourage sharing links on social media platforms
• Partner with other brands to offer exclusive deals for your loyal members

Thorough loyalty & referral programs can bring in a significant number of repeat buyers. Also, paying the benefits on time will help you build customer trust. So, pay what’s committed.

Build a Trustworthy Social Media Presence

If you want to transition from “just another business” to a brand, you’ll have to have a stellar social media presence. It takes time but pays off in the long run.

Social media presence gives people a chance to interact with you. You’ll get many customers if your brand is credible online. 46% of U.S. consumers & 40% of U.K. consumers favour brands that have a social media presence and interact with customers on different platforms.

With right messaging and engagement, you’ll have a clear edge over your competitors. You’ll also start receiving customers organically which reduces CAC. With a positive first interaction, people will be primed to become repeat buyers!

Don’t miss out on social media marketing – it can do huge wonders for customer retention!

Return Policy Should be Clear & Easy

Iffy return policies is a common reason why customers bounce off a store.

A study from Baymard shows that 18% of people will abandon their carts if the return policy isn’t clear. That’s because an unclear return policy makes it hard to trust the store.

Ensure that you have a clear policy that’s easy to understand. People are more likely to purchase something when they’re sure that they’ll get a refund if they don’t get what they want.

It’s a trust factor – once you make people trust your store via a clear return policy, they’ll even pay a higher price for peace of mind. 53% of people will pay more if they’ll get a more convenient experience with a business.

Consider following these tips for a clear policy:

• Keep the policy simple and jargon-free
• Allow refunds, exchanges, or store credit
• Highlight the return process on product pages
• Ensure the policy is easy to find on your website

(31% of people can leave the store if they don’t find the policy)

Implementing these tips strategically can significantly boost your CRR and show growth on your balance sheet.

Some Metrics That Improve with High CRR

Now that you know how to improve the CRR.

But, eventually, growth needs to be reflected in numbers, right. See the common metrics that improve with high CRR and how to calculate them.

Customer Lifetime Value (CLV)

A high CRR directly impacts customer lifetime value – how long a customer stays with the business. The longer they stay the better because they deliver higher ROI on the initial acquisition cost.

CLV=Average Purchase Value×Purchase Frequency×Customer Lifespan

Churn Rate

The churn rate is a huge problem for ecommerce businesses. Churn means how many customers leave you after a certain time. One-time shoppers contribute to high churn while retained customers lower the churn which every business wants.

Churn Rate = (Total Customers / Customers Lost​) × 100

Net Promoter Score (NPS)

NPS is the likelihood of an existing customer recommending your brand to others. This is usually calculated via surveys and every business has a way to enquire this from their customers.

A simple “How likely are you to recommend us to others?” (Scale of 1-10) incorporated in a survey can help you calculate your NPS.

Customer Satisfaction Score (CSAT)

Eventually, this is where higher retention rates will reflect – these are your satisfied customers who are the heart of your business. Your goal should be to achieve the highest possible CSAT scores.

CSAT = (Positive Responses​ / Total Survey Responses) ×100

Conclusive Thoughts – Don’t Avoid Retention

Focusing on customer retention is one cost-effective way to grow your business.

It takes less efforts and resources while delivering higher ROI. Smart business owners know this and strategize accordingly. We’ve provided you the direction to tread and you’re free to implement them as you wish.

However, ecommerce is highly competitive and each business has its unique strengths and weaknesses. So, don’t chase shortcuts because what works for one store may not work for you.

Also, ecommerce growth is a marathon, not a sprint. You’ll have to put in continued efforts and it can even take a few tries before you find the perfect growth recipe for the business.

References:

https://www.kerry.com/insights/kerrydigest/2022/limited-time-offer-roi.html

https://www.semrush.com/blog/customer-retention-stats/