How to win big with a customer retention strategy
Many stores only focus on customer acquisition. However, having a customer retention strategy could help them increase sales and revenue. Ideally, a stable online store should have a high volume of repeat customers: buyers who are loyal, like your products, and even recommend you to their friends.
How to implement a customer retention strategy that will help you succeed? How important is customer retention for an online store? This post will show you the key elements you need to take into account to build customer loyalty in your online store.
Why do you need a customer retention strategy?
Attracting new customers to an online store is more difficult than retaining existing ones. It is the famous debate between customer acquisition vs. customer retention. And the reason is simple: a customer who has already purchased once knows how the process works and has already been rewarded for his or her trust. In contrast, new users coming to your site have not yet taken the first step.
Creating a customer retention strategy consists of focusing on that group of customers who have already made a purchase. It is about developing a series of actions to get those users to make a second and third purchase and turn them into loyal and recurring customers.
That doesn't mean that you stop making efforts in customer acquisition. Attracting targeted traffic to your website is extremely important. In fact, all recurring customers were "new customers" at some point. However, you must take into account everything that happens to users from the moment they make their first purchase.
What to keep in mind to retain customers in your online store?
There are different elements to consider for customer retention in eCommerce.
Customer lifecycle
The customer lifecycle refers to the duration of each customer's life from the time of their first purchase. No repeat customer stays with you "forever". Some may remain loyal for 3 months, others for 1 year, others for 5 or 10 years... But you know that they will stop buying at some point, for whatever reason (death, moving to another country, financial problems...).
It is not 100% in your power to ensure that customers stay with you forever. But you can influence them to try to extend the customer's life cycle as long as possible.
Customer value
Not all repeat customers have the same impact on your online store. If you were to lose one of these customers, you would realize that the effect is not the same. A customer who makes 20 purchases of 20 euros (20x20=400) throughout the year is not the same as a customer who makes 4 purchases of 200 euros (4x200=1200 euros).
You need both types of customers. Not all customers buy high-priced products on a recurring basis. Your customer retention strategy should be oriented to take care of and pamper your best customers.
Customer retention rate
Customer retention goes up and down. New customers appear and quickly become repeat customers, and old customers stop buying. The point is that your number of customers should be increasing month by month, not decreasing
You can measure your customer retention rate using the following formula:
(Customers at the end of the month - New customers / Customers at the beginning of the month) * 100.
So, for example, if you had 30 customers on June 1, and you gained 5 new customers, but at the end of the month you gained a total of 33 customers, your customer retention rate would be:
( 33 - 5 / 30 ) * 100 = 93,33% customer retention
This means that, although you have gained 5 new customers, you have lost 2. The retention rate shows us the capacity of your online store to satisfy your current customers. Although it is very difficult not to lose any customers, what really matters is to maintain a high retention rate. Increasing your retention rate means more revenue. Otherwise, you will have a decreasing number of customers in your online store.
Although we have used months as a reference period, you can calculate the customer retention rate for any period of time (week, month, quarter, year...).
How to increase revenue with your customer retention strategy?
Customer retention rates can be increased in several ways.
- Increases customer satisfaction
You can apply techniques to improve the user's shopping experience. For instance, improving the checkout of your online store to make the process clearer and more intuitive, reducing shipping costs, or offering a better technical support service by phone, email, or chatbot.
- Create a customer loyalty program
One way to get customers to make more purchases from your online store is through a discount program. Get customers to make repeat purchases through a rewards program that encourages them to accumulate points when they make new purchases.
- Increases the purchase price of the product
You may not get your customers to buy as often as you would like. But you can get them to increase their buying volume. Apply cross-selling techniques (selling related products) and upselling (selling better products at higher prices) to increase the customer's value. You can also offer free shipping over a certain amount (30, 60 euros...).
- Reduce abandoned cart rate
Do you have customers who add a product to the cart but don't complete their purchase? Use an abandoned cart recovery strategy with email marketing and Klaviyo. This way you can increase your sales, get more revenue and increase your customer retention rate.
At Webmefy we advise you to take your online store to the next level. Increase your sales and get a higher customer retention rate through techniques that work and help you achieve success and drive sustainable eCommerce growth. Feel free to contact us today to boost your retention strategy.
