10 Ways to Increase Customer Retention in eCommerce in 2024
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 in ecommerce 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 in e-commerce. 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 Customer Retention Rate (CRR)?
Customer retention in ecommerce 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 Calculate 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 Customer retention rate in eCommerce?
As Omniconvert reports, for eCommerce brands, the average customer retention rate in ecommerce 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 relevance. 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. In Klaviyo's 2023 marketing mix survey, 76.86% of ecommerce businesses identified email marketing as one of their top 3 ROI-generating marketing channels.
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.
According to a 2021 Statista report, email marketing revenue is estimated to reach almost 11 billion by the end of 2023. The same source also indicates that there are 4 billion daily email users, which is expected to climb to 4.6 billion by 2025. Additionally, more than 306 billion emails are sent and received each day, as reported by Statista in 2021.
Email marketing isn't about being promotional all the time. You can send holiday and seasonal greetings, educational content, customer stories, and more. You may also opt for AI-Driven Email Automation to enhance and engage with your subscribers. However, if you want an effective re-engagement email strategy, at Magebit, we can set up seamless re-engagement campaigns and flows for your business.
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 the average customer retention rate in ecommerce 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 significant orders. Devote your time, effort, and creativity further to 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. 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 in ecommerce 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 make 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 saves 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 them a reason to buy they will justify.
For example, you can experiment with 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 in ecommerce and how ecommerce is helpful in customer retention.
8. Establish a Strong Social Media Presence
Having a solid social media plan can make all the difference for you when it comes to retaining customers, especially if you're targeting millennials or Generation Z. If you're in the business of online sales, a solid social media presence is essential. You can use various platforms like Facebook, Instagram, Twitter, TikTok, and others to reach and engage your audience effectively.
TikTok, with its staggering 1 billion monthly active users (MAUs), as reported by Backlinko, offers you a tremendous opportunity to boost your customer retention. TikTok trends and challenges can quickly become viral sensations.
By participating in relevant challenges or starting your own, you can engage your customers and foster a sense of belonging within your brand's community. On the other hand, Facebook maintains its status as the most widely adopted social media platform on a global scale. This information is based on the "World's Biggest Social Media Platforms" report conducted by Data Portal in October 2023
Start by promptly addressing any questions and concerns your customers may have. Ensure that customers who express positivity towards your brand feel acknowledged and appreciated. Keep a watchful eye on how your customers engage with your social media channels, including mentions, hashtags, and direct posts.
9. Maintain a Distinctive Brand Look
For e-commerce brands like yours, establishing a unique brand identity relies on the strategic fusion of visual elements and digital storytelling. Elements such as color schemes, typography, and digital imagery are your initial touchpoints with online shoppers. These elements help evoke emotions and shape your brand's personality.
Take Coca-Cola as a notable example. They've successfully crafted their brand identity by strategically using their iconic red and white color scheme and timeless cursive logo. Starbucks, on the other hand, utilizes a distinct narrative approach. They share stories about the origins of their coffee beans, forging a connection between their product and the communities they support.
In both these cases, the combination of visual elements and compelling storytelling has allowed these brands to not only capture the attention of their audiences but also cultivate enduring relationships and brand loyalty, which you, too, can achieve.
10. Offer More Delivery and Return Alternatives
Customers desire a seamless online shopping experience, often the primary motivation behind choosing e-commerce over traditional in-store purchases. To simplify this experience, consider expanding your delivery and return options to accommodate diverse preferences and requirements.
According to a survey by Statista in October 2023, when queried about their future delivery preferences, most online shoppers in the United States (58 percent) indicated a preference for traditional delivery methods, such as postal workers using gasoline-powered vans. In contrast, a smaller percentage of respondents expressed an inclination towards more environmentally friendly delivery options, with 37 percent considering electric delivery vans and 19 percent expressing an interest in cargo bikes for future deliveries.
For those who prefer to take their time, there's the standard shipping choice, while shoppers in a hurry may appreciate express or next-day delivery. Additionally, offering free returns can reassure customers with second thoughts about their purchases, promoting customer retention in e-commerce. By providing a range of options that cater to different customer profiles, you can ensure a stress-free shopping experience for all.
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 average customer retention rate in ecommerce in ecommerce — 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.
Why do you need a shipping and return policy?
For online eCommerce businesses to thrive, it's essential to establish transparent and equitable shipping and return policies. Most customers hesitate to make a purchase when uncertain about delivery times or the assurance of refunds for unsuitable products.
What is the main purpose of customer loyalty strategies?
Loyalty programs serve a dual role: They incentivize and recognize customers for their continued support while also furnishing the company offering them with valuable consumer insights and data.
What does the 80-20 rule entail for a company?
The 80-20 Rule, also known as the Pareto Principle, is a concept frequently applied to highlight that 80% of a company's revenue typically stems from just 20% of its customers. When viewed through this lens, it can be beneficial for a company to concentrate its marketing efforts on that crucial 20% responsible for generating 80% of its revenues.
What are the best times for email engagement?
Both email opens and clicks reached their highest points at 10:00 AM. During the afternoon, email opens peaked at 3:00 PM, while click-through rates reached their zenith at 4:00 PM. The reason behind the increased open and click-through rates during these times is typically that individuals tend to check their email shortly after starting their workday.
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.
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