With over 26 million ecommerce websites around the globe, there is a lot of competition among online retailers. So, what is the secret to running a profitable ecommerce business? The answer for most online retailers is customer retention. It can be expensive to acquire new customers. Customer acquisition can cost up to $200 per customer depending on a variety of factors. It is important, and profitable, to keep customers coming back once they have visited your site. The best online retailers create a customer experience on their ecommerce websites that makes customers want to come back and buy again. Increasing customer retention is the best way to increase profitability, lower customer acquisition costs and keep your business growing.
What is Customer Retention?
Customer retention is a measurement of how many customers return to a store to make another purchase. It is measured using the Customer Retention Rate and it is an indicator of customer loyalty and a sign that your customers are happy with your business and trust you enough to buy from you again. Without customer retention you would have to acquire new customers all the time.
How Do You Measure Customer Retention?
Customer Retention Rate is measured as the number of customers your company retains over a defined period of time. If you had 1,200 customers at the beginning of the month, acquired 600 new customers and ended up with 1,400 new customers at the end of the month, your customer retention rate for that month would be:
(1400 – 600)/1200 = 0.667 (x 100 to get 67%)
The higher the number the more satisfied customers you have and the more profitable you will be. Customer retention is a key metric for online retailers.
Why is Customer Retention So Important?
Online retailers want to keep customers satisfied and customer retention is a measure of how well an online store did in meeting customers’ expectations. As opposed to brick-and-mortar retail stores, with limited geography and limited physical competition, an online store’s competition is just a click away. It is important to make a good first impression so that customers return. Every customer that buys once and never comes back means another new customer you have to acquire and start the sales process all over again.
6 Customer Retention Strategies
The best online retailers use several strategies to increase their customer retention and continue their success. Here are a few of them:
1. Define Metrics and Create Measurements to Guarantee Success
The best way to know if you’re winning the game is to keep score. Create KPIs and success metrics and track them to make sure your strategies are having the proper effect. Keep track of metrics like customer satisfaction, conversion rate, and, of course, customer retention rate.
2. Give Customers a Reason to Come Back
Stay in touch with your customers after they purchase from you. Regular communications via email and social media will keep them engaged and keep your brand top of mind. Offer discounts for referrals and repeat purchases. The more engaged a customer is with your brand, the higher likelihood that they will come to you when they need your product.
3. Leverage Customer Data to Personalize Messaging
Customers like to be remembered. Just like in the old days when the neighborhood shopkeeper would greet you by name when you walked through the doors, acknowledge returning customers on your ecommerce site. Customer retention is about giving customers a positive feeling and a memorable experience. If you track customer preferences and order history, use this to create customized offers and recommendations to help with their decision making. The customer will appreciate it.
4. Create a Memorable Shopping Experience
Customers are less likely to return if they have to hunt for information or ask for help. Many retailers like to jump straight to the sale and miss opportunities that might make the customer journey smoother. Product information, reviews, and accessory recommendations create a helpful, smooth journey from your home page to the shopping cart.
5. Leverage the Post Purchase Experience with a Customized Post Purchase Platform
The post purchase experience may be the most important phase of the customer journey when it comes to customer retention. If a customer has a bad delivery experience or has trouble finding order tracking information, they will blame the retailer and may not return to buy from you again. A good post purchase platform also includes opportunities to engage the customer during the post purchase experience with useful product information or additional incentives to return to your site.
6. Incentivize the Customer to Return with Loyalty Programs and Rewards
Sometimes all a customer needs to make a decision is the proper incentive. If your product is available on other sites, convince the customer to buy from you by offering points towards a discount or free shipping. Create promotional offers that reward customers that make multiple purchases or develop a buyers club that makes the customer feel like they are part of a community. Create a desire for the customer to buy from you specifically and you will naturally increase customer retention.
Conclusion
There are many keys to the success of an online store, but customer retention could be the most important. Once you have the customer’s attention, it is important to give them the experience they expect and keep them satisfied so that they will continue coming back.
WISMOlabs Post Purchase Experience Platform can help you keep your customers loyal and reduce costs by giving your customers a complete customer journey, especially after the purchase. Contact us now to see how we can help.
