Blog 7 Proven Ways to Increase Customer Retention in eCommerce

E-commerce | Aug 26, 2022

7 Proven Ways to Increase Customer Retention in eCommerce

Julia Abbasova
E-commerce certified specialist

Growth is not about one-time sales anymore. Customer acquisition costs (also known as CAC) confidently grow across all platforms — and as more players enter the market, they will predictably move up. These spike-like changes are especially true for the busiest shopping days like Black Friday or Christmas, where the PPC (pay-per-click) costs go through the roof.

Talking user acquisition, the stakes are rising for bringing new clients, forcing many brands to shift to thought-out customer retention strategies. The new reality is — to ensure clients purchase from you repeatedly, you should put relationships with existing customers in the first place.

So, instead of spending on no-results-guaranteed paid acquisition of new customers, develop a game plan for increased customer retention.

Let’s dig deeper into tactics that help hit your growth goals by engaging back your existing clients, and keeping them on track to purchase from you again.

What is the customer retention rate (CRR)?

Customer retention rate shows how many clients return to you within a certain period (e.g. week, or 6 months). Simply said, it measures whether purchasing from you satisfies your current customers to the point where they won’t switch to competitors.

How to tally CRR?

Here’s a formula to find out what’s your CRR:

Here’s a quick eCommerce-related example:

Your eCommerce business had 1,000 buyers at the beginning of the week. You finish the week with 1,200 buyers, winning 300 new shoppers on the go. Your customer weekly retention rate is 90%.

What’s the average CRR in eCommerce?

As Omniconvert reports, for eCommerce brands, the average customer retention rate in 2021 was about 30%. If yours is any higher — you’re ahead of the pack.

But what if you want more returning, ready-to-buy clients?

Here are seven tried-and-true tactics to increase returning customers for your eCommerce store.

#1 Personalize buying experience

Depending on what channels customers come from, their buying preferences may noticeably vary. As a business, you want to understand what items in the recommended-for-you list will be of maximum relevancy. Keep an eye on what customers type in the on-site search and towards what products they demonstrate buying intent.

Despite many people choosing to checkout as guests, ask your customers to opt-in to your list in exchange for an irresistible offer (like coupons, exclusive birthday deals, or 30% off the next purchase). Next time they visit your digital storefront, you can use the collected data to direct buyers to the goods they will luckily purchase.

Below is a good example of the discount-for-email offer by one of the most popular hockey equipment stores goaliemonkey.com. They show the opt-in tab to new (or anonymous) visitors right away, building their customer base from the very first steps.

#2 Go all-in on re-engaging emails

Customers who make just one purchase and then disappear are increasingly commonplace. And it’s not they were not 100% happy with your product. They might simply forget your brand among hundreds of other names they keep in their mind. Or they got intercepted by competing brands. Anyways, to re-engage your one-time buyers, tailored email marketing campaigns are a good go.

Greet your buyers with a welcome email once they buy from you for the first time. Use emails as triggers for repeated purchases, upselling and cross-selling. Set up cart abandonment, special occasions, or win-back emails to nudge shoppers to buy more (and more frequently) from you.

Email marketing isn’t about being promotional all the time. You can send customers valuable content that resonates and maybe educate your clients. Success stories or how-to's about your product may become a win-back part of your newsletter.

#3 Tailor your pricing for returning customers

People love a personalized attitude, especially when it’s about price-related perks. So why not help your shoppers buy from your brand more frequently? Nudge them towards their next purchase by offering 20% off, free shipping and returns, or a $15 coupon.

Look how Timberland tailors prices for a specific niche — teachers and college students — by offering a 10% discount. They also have a similar program for the military.

If it applies to your products and services, offer a recurring subscription or membership. Just be sure to clearly convey the benefits customers get from opting in.

During crazy shopping seasons when people are getting presents for their beloved ones, consider offering product bundles — a surefire way to increase sales together with customer retention.

#4 Reward your VIP clients

Another way to increase customer retention is to apply the 80/20 rule to your brand. Simply said, start taking care of your most profitable clients.

Find out what customers bring you the most money or place the biggest orders. Devote your time, effort, and creativity to further build the loyalty of your most important clients. Give them exclusive bonuses and signs of appreciation — so they know your business values them.

The VIP attitude doesn't necessarily mean a huge discount. This may be a freebie box full of uplifting small things with a hand-written thank-you letter inside. Or basically, anything that sticks to the memory and can potentially create a loyal customer for life.

#5 Craft customer service to satisfy

Another proven way to retain clients is to provide a seamless buying experience. But customer retention strongly depends on customer satisfaction.

If your service at some point disappoints customers, they will switch to a competitor in a blink. According to American Express, 30% of consumers will leave a brand after just one case of poor customer service.

Many of us are last-minute buyers. As people want shopping to be fast and friendly, tailor your customer service to make purchasing from you a positive experience.

You want your customer service to look like the one below (another great, thought-out execution by Timberland). Straight-to-the-point copy, visual icons, and, more importantly, the process behind that makes purchasing from the brand easy and joyful.

You want to make sure your clients don’t have to deal with things like several-day responses to complaints, delayed shipping (which is frequently late for the occasion), or a complicated return process. And if a situation like this still happens, help quickly resolve it, so great customer service will be the point that saved a client for your business.

#6 Offer a customer loyalty program

A well-thought-out customer retention strategy can bring outstanding results for your eCommerce business. It may include all kinds of beneficial perks — special discounts, free returns, or personalized gifts on orders over a certain total. Having your loyalty program lean on purchase frequency is a proven tactic to increase repeated sales from your brand.

Here are some of the perks Pandora offers in their loyalty program.

The gamified loyalty program notably drives retaining customers. Many brands implement point-based systems as well as different types of contests to drive sales by making taking part in loyalty programs fun for customers.

#7 Incentivize the next purchase

Don’t just sit and wait for the existing clients to return the next time they need your product. Help them come up with a buying intention. This may be a seasonal clearance, a refined collection, or a limited-time offer powered by an impressive discount. Or all of it combined.

Shoppers demonstrate specific intent and behavior when the timing is crucial. Nudge them to purchase more by giving a reason to buy they will justify.

As an example, you can experiment with the FOMO (Fear of Missing Out) tactics like setting time limits, social proof, or limited-issue deals. These tactics are battle-tested for boosting customer retention.

Just look, at how smartly the Foundr magazine creates the feeling that the courses are in great demand — with Proof pop-ups.

Final thoughts

As your current clients already know your brand, it significantly simplifies the challenge of bringing them to your storefront and communicating your product value. In terms of ROI, it’s up to 7X times more effective to put time and effort into retaining customers instead of spending a fortune on acquiring new users.

By implementing the described-above strategies, you’ll be well on a fast track to increasing customer retention — and revenues — for your eCommerce business.

Even if you start small with just one of them, you’ll make that important shift to building authentic customer relationships, giving your more returning clients in the long run.

Magebit is a full service eCommerce agency specialized in Magento. At Magebit we create the wonders of eCommerce and support small sites as well as large enterprises.

You can contact us at info@magebit.com or through the contact us page.

Julia Abbasova
E-commerce certified specialist
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