Getting your existing customers back to shop with you again, is way easier and cheaper than attracting in new customers!
In the fast-paced world of e-commerce, businesses often focus heavily on attracting new customers, pouring resources into marketing campaigns, social media ads, and influencer collaborations. While acquiring new customers is undeniably important, many e-commerce business owners overlook a crucial element that can significantly impact their bottom line: customer retention.
Why Does Customer Retention Matter?
Customer retention is about building and nurturing relationships with your existing customers, encouraging them to return to your store, and making repeat purchases. But why is this so important? Let’s consider a simple question: What makes you go back to your favorite shop, restaurant, or service provider time and time again? Is it the quality of the product, the excellent customer service, a unique product offering, or perhaps the incentives and rewards they offer?
The reasons you keep returning are the same reasons that should be factored into your own e-commerce business strategy. Customer retention isn’t just about making a sale; it’s about creating a positive, memorable experience that encourages customers to come back.
The Cost of New Customer Acquisition vs. Retention…
One of the biggest mistakes I see in the e-commerce space is the overemphasis on customer acquisition at the expense of customer retention. Attracting new customers is often more expensive, both in terms of time and money, than encouraging past customers to make another purchase. The customers who have already bought from you are considered “warm” customers. They already know your brand, have experienced your products or services, and hopefully, have had a positive experience.
Re-converting these warm customers is significantly easier than trying to convince a completely new audience to trust your brand and make their first purchase. Studies have shown that repeat customers are likely to spend more on subsequent purchases compared to their first transaction. In fact, increasing customer retention by just 5% can increase profits by 25% to 95%!
How to Build Your Customer Retention Strategy
Despite the clear benefits, many e-commerce business owners neglect to implement a solid customer retention strategy, missing out on substantial revenue opportunities. If you’re one of those business owners who haven’t yet prioritized retention, it’s time to rethink your approach.
The first step in building a customer retention strategy is to understand why your customers are coming back—or why they aren’t. This can involve analyzing customer feedback, monitoring repeat purchase rates, and looking at the overall customer experience. What are you doing well that keeps customers coming back? What areas need improvement? Once you’ve identified these factors, you can tailor your retention strategy to address them.
There are several key elements that can contribute to a successful customer retention strategy:
Personalized Communication: Personalized emails, messages, and offers can make your customers feel valued and understood. Use data from previous purchases to recommend products that align with their interests, and send personalized discounts or promotions to encourage them to come back.
Loyalty Programs: Rewarding your customers for their repeat business is a powerful way to build loyalty. Loyalty programs that offer points for purchases, exclusive discounts, or special perks for frequent buyers can incentivize customers to choose your store over others.
Exceptional Customer Service: Great customer service can turn a one-time buyer into a lifelong customer. Make sure your customers have a positive experience at every touchpoint, from browsing your website to receiving their order. Respond to inquiries promptly, resolve issues efficiently, and go the extra mile to exceed their expectations.
Regular Engagement: Stay top-of-mind by engaging with your customers regularly. This can be through email newsletters, social media, or even direct mail. Share updates about new products, upcoming sales, or useful content that resonates with your audience.
Exclusive Access: Offering your returning customers exclusive access to new products, sales, or events can make them feel like VIPs. This not only rewards their loyalty but also creates a sense of community around your brand.
I explain a bit more about all of these in my FREE Convert More Customers guide – where I share with you some of the biggest misses I see so many of my clients struggling with, that are really simple to fix and will get your browsers converting in to buyers instantly! You can download it for FREE here.
What Is Your New vs Return Customer Rate?
If you’re unsure how your business is performing in terms of customer retention, it’s essential to dive into your analytics. Tools like Shopify, Google Analytics, or your preferred e-commerce platform can provide valuable insights into your new versus returning customer conversions.
TAKE ACTION: Go and check the customer retention rate for your business right now! Anything less that 25% would suggest there is an issue with your retention strategy.
(How to work it out: customer retention rate = (number of customers at the end of a given time period – number of new customers)/number of customers at the beginning of that time period.)
If yours is lower than 25% let’s book in a 90 minute 1-1 strategy boost session and I’ll help you build your new customer retention strategy personalized for your ecommerce business! Find out more here.
Monitoring these metrics regularly will help you understand the balance between if you need to focus on new customer acquisition or retention and identify and will show you which areas where you can improve. If you find that your retention rates are lacking, it’s a clear sign that you need to implement or enhance your customer retention strategy.
Want to Learn More About Selling in Your Ecommerce Business?
Customer retention strategies are just one way you can enhance sales organically for your e-commerce business. I teach more strategies for selling in your e-commerce business in my comprehensive online course “Step Up Your Sales,” which shows you how to use the key data and KPIs in your business to build a new sales strategy that feeds your website and marketing content to ensure your customer has more incentive to convert.
Step Up Your Sales also includes a bonus module dedicated entirely to customer retention strategies. This module covers everything from creating personalized marketing campaigns to implementing loyalty programs and analyzing customer behavior. It’s designed to help you maximize the value of your existing customers and ensure that they keep coming back.
Investing in customer retention is one of the smartest moves you can make as an e-commerce business owner. Not only does it increase the lifetime value of each customer, but it also creates a more sustainable business model that isn’t solely reliant on constantly acquiring new customers.
So, if you haven’t already, it’s time to log in to your analytics, assess your customer retention performance, and start implementing strategies that will keep your customers coming back for more.
