You have often heard it is easier and cheaper to get current customers to make another purchase than to attract new customers. It’s 100% true! The probability of selling to an existing customer is between 60% and 70%, while selling to a new customer is between 5% and 20%.
As the e-commerce space continues to become more competitive and more expensive to attract clicks and conversions, building a customer-centric business model will prove the most lucrative.
In this post, we break down what customer retention is, the benefits of customer retention, and how you can employ customer retention strategies that support a customer-centric business model.
What is Customer Retention?
Customer retention is the focus on increasing repeat revenue from your current customers. By implementing specific strategies, you can build customer loyalty and extract additional value from your customers. Many businesses don’t review this metric in their dashboards. They focus on revenue or cost-per-acquisition to determine the success of their marketing. Adding this metric in can help you understand if your customer lifetime value is increasing, which is one of the fastest ways to start scaling your ecommerce business.
What are the Benefits of Customer Retention Strategies?
Customer retention is an important component of a successful customer-centric business model. You work very hard to attract a prospect and even harder to get them to convert. Getting these customers to stay and make repeat purchases… well that is a whole other ball game. By implementing customer retentions strategies, you can see the following benefits for your business:
Loyalty Leads to Higher Lifetime Value of a Customer
When you work hard to retain loyal customers, you are building a meaningful relationship that will be profitable to both you and your customers. Approximately 43% of U.S. consumers indicate they are willing to pay more for products from a brand they are loyal to.
Customer Retention Leads to Increased Revenue
Loyal customers who have an affinity with your brand are more likely to purchase additional products from your store. In fact, existing customers are approximately 50% more likely to try a new product from a brand they are loyal to. High customer satisfaction can lead to a revenue increase across all product families.
Loyal Customers Turn to Brand Advocates
When a product or brand becomes such an integral part of a customer’s life, they naturally turn from a consumer to an ambassador. Using word-of-mouth marketing, your customers can turn intrigued friends into a large loyal customer base. Believe it or not, 88% of people indicate a high level of trust in a brand when a family or friend recommended it.
Customer Retention Strategies
When you are looking to improve your customer retention, consider implementing any or all of the following strategies:
Build a Customer Loyalty Program
Effective loyalty programs encourage customers to make repeat purchases to earn rewards and discounts. When properly implemented, it builds consistent revenue and rewards lifetime customers. You can also utilize this loyalty program by providing incentives for the customers to share their love and loyalty for your products with friends and family.
Offer Exceptional Customer Support
Think of your all-time favorite brands, do they go above and beyond to exceed your expectations? Do you trust they will make things right for their customers? Reliable and responsive customer support drastically improves your customer’s experience with your brand. 89% of consumers indicate they are more willing to come back and make a repeat purchase after they have a positive customer service experience.
You should also work to simplify your customer support process. Most brands we talk to use multiple tools and nothing talks to each other. Using a tool like Gorgias allows you to take email, SMS, live chat, etc, and funnel it all into one support dashboard where you can engage customers where they are vs forcing them into one method of communication. Things like this go a long way to building brand loyalty.
Build Custom Accounts
Have you ever wanted to make a repeat purchase from a brand but forgot the exact product you last purchased? Having a personalized account that keeps track of what you ordered in the past can help consumers convert with ease. It also benefits the end user by having their personal information saved for quicker purchases in the future.
Educate and Engage with Emails
Email marketing allows you to make a strong impression prior to and post-purchase. Through strategic email campaigns, you can build a relationship, set expectations and provide a customized experience with your brand. When we say customization, we don’t mean adding a greeting with their first name. We mean showing them products that they might be interested in based on views and purchase history. Or even reminding them to refill their product when they would typically run out and need a new one.
Offering an open feedback loop for your customers to let you know what is working and what is not working with your products, is a strong way to maintain customers. Responding to feedback lets customers know they are more than a number in your sales system.
Make Returns as Simple as Possible
Approximately 33% of repeat customers have admitted they would abandon a sale if the brand had a difficult return process. Remember returns are a critical component of a successful customer service experience. Leading e-commerce brands make it easy to return products with fast and free returns. Customers sour when their return requests are slow to be answered, when they have to pay for a return label, and when they have to follow up with you about the status of the return and when the refund will be issued or exchange will be sent out.
Improve Your Customer Retention Today
As you continue to build a customer-centric business model, implementing customer retention strategies will go a long way in building trust and life-long loyalty to your brand.
Your customer base is your largest asset, so it is important to treat them right and to maintain their trust through ongoing strategies that commit to providing an improved experience.
Greg is the founder and CEO of Stryde and a seasoned digital marketer who has worked with thousands of businesses, large and small, to generate more revenue via online marketing strategy and execution. Greg has written hundreds of blog posts as well as spoken at many events about online marketing strategy. You can follow Greg on Twitter and connect with him on LinkedIn.