8 Ways To Improve Customer Retention In Ecommerce

Ever left something behind at a party?

It’s not a good feeling.

Not just because you’ve lost something of value, but now you have to try and get it back.

Think about the pain of “retracing your steps”, desperately asking friends if they saw something, followed by the obligatory, awkward, ‘I lost my phone’ type social media update. Gulp.

Aside from the minor social faux pas, it’s tedious, and explains why some people just don’t bother – most things are easily replaced, right?

Wrong.

Replacing your most valued assets is expensive and unnecessary.

The Price of Pain

Whether it be a phone, a piece of jewelry, or your hard-earned list of subscribers, it’s important to look after what you have.

Smart online marketers understand that the people who give them permission to talk to them are their most valued asset.

They know that once lost, even if they do manage to ‘replace’ them, (which can take a long time), it’s a much better investment to keep the customers they have.

For example, you don’t know anything about new subscribers.

They might not have a purchase history with you, or they might not even have a user profile; meaning that you’re back to square one in terms of what you can say to them.

In addition, there are the statistics, which speak volumes.

Did you know?

  • It costs a business 5-10X more to acquire a new customer than to keep an old one.
  • Existing customers spend 67% more than new ones.

(Source: Hubspot)

Crazy Egg provides us more evidence.

graph showing probability of selling to new prospect vs existing customer

In today’s article, we take action on the above insight by talking about what you can do to retain the subscribers you have, and how to make them more profitable in the long term.

Before you start trying to retain what might be a rapidly dwindling list however, it’s worth knowing what you’re doing wrong to lose them in the first place.

Kissmetrics provides us this simple graph which should have you asking the most important question for any business:

How am I treating my customers?

graph of fastest ways to lose customers

Once you’ve acknowledged where you might be going wrong, it’s worth getting focused on what your goals actually are.

According to Big Commerce, there are only 3 ways to improve your ecommerce business, the first two of which rely on a strong rate of customer retention:

  • Increase average order value (AOV)
  • Increase frequency of purchase
  • Increase total number of customers

These are what they call ‘Retention Multipliers’, and claim that a 30% increase in each can yield a 220% increase in revenue!

It looks a little too simple but provides an easy-to-follow framework for growth based on:

  • up-selling
  • incentivizing more frequent purchase and,
  • organically attracting more subscribers (not replacing lost ones).

man sitting down on a computer with lots of applications opened

Here are our 8 Ways To Improve Customer Retention in Ecommerce

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1. Reward Behaviour

A buyer rewarded for his or her purchase decision is 1,000 percent more likely to repeat that behavior.

It’s common sense. Think about it;

You want something. It’s hard to find but eventually, you do and then you buy it.

You’re thanked for your purchase and incentivized to buy again; a coupon or a discount of some kind.

Cartoon showing the life cycle of a customer buying online using stick figures

 

After taking a mental note of the place you bought it, you forget all about the experience and then months go by until suddenly, you need the item again.

But where did you buy it before?

stick figure confused where to buy a present

Somehow you remember a follow-up email you received offering a 15% off next purchase.

stick figure receiving a follow-up email

So you dig into your inbox and retrieve it. Result!

After that, you’re directed back to the product’s checkout page and voila, you buy again!

stick figure loving their purchased product

The above scenario is an example of what can happen when you successfully engage with your customer, establish trust via the first purchase, and set up a dialogue that you’ve worked on over the ensuing months.

You’ve been persistent, maintained your tone of voice and turned a one-off purchase into a potentially high-value lifetime customer, all because you’ve successfully added value and rewarded the first behavior.

As an online marketer, your value proposition skyrockets when you deliver on a promise like this.

This promise should include products in your inventory being in stock, prompt delivery, and the opportunity to achieve rewards on next purchase. These are the basics of product merchandising you’ll see in any brick-and-mortar set up, and should be no different online.

man against a black wall with logos around him

Be aware that in many cases a strong value proposition will be enough (within reason) to overcome potential price differences. It’s why features like free 2-day shipping have put Amazon in the position it is today.

Furthermore, the value of a retained customer increases the longer the relationship lasts, meaning a two percent improvement in retention might be as effective as cutting costs by ten percent.

The bottom line: hang on to your people! They are your tribe.

A long term customer can also become a valuable source of referral and recommendation. Never underestimate the value of word of mouth. It’s why you should be asking for a review of the service you’re providing, and maintaining your presence on social media, where people can talk about you.

2. Establish a Loyalty Club Program

Better than just a one-off reward, why not start a club for your growing list of high-value customers? Think of it as a way to segment and reward those who reward you.

There are so many examples of Loyalty Clubs that work, and just as many that don’t, but before you establish one, ask yourself:

  • Does this add customer value?
  • Does it intrude upon the original purchase process?
  • Is it easy to use?

Offered to customers who make frequent purchases, a standard program may give away free merchandise, rewards, coupons or ‘VIP’ access to new products based on customer action. This last part is very important.

In 2015, American households were said to hold membership to an average of 29 loyalty programs, but were only active in less than half of them, meaning that the first question; ‘Is this adding value?’, becomes extremely important.

Here are some tips for establishing the best loyalty program:

• Use a point system

⇒ Think of any ‘frequent flyer’ club you’ve ever heard of, or any credit card rewards system.

Keep it simple and easy to understand. Complicating it will ensure a low rate of sign-up, especially when the cost of that includes an inbox full of promotional material.

• Introduce a tiered reward system

⇒ Make that first reward easily attainable to encourage further purchase. If the gap between purchase and gratification is too long, your customer is likely to be distracted and inactive.

Here’s an example from Virgin:

reward system of gold members

• Charge for it.

reward system for amazon prime

⇒ Look no further than Amazon’s Prime for this. They charge an annual fee for a service that expedites delivery and in doing so encourages repeat purchase behavior. Why would someone pay $99 for a service unless they were going to use it? They wouldn’t. Make sure the offer you make is also going to be worthwhile.

• Don’t be obsessed by profit

⇒ There’s a turn-off factor about money-hungry corporates. Don’t fall into the trap. If you know your audience and can offer value other than simply more savings or more discounts, take the initiative and do something bigger than yourself.

• Partner up.

⇒ Again this is about knowing your customer. What else do they want? Where else are they likely to shop? Partnering up also extends your reach, and tells your customers that you care about them. Are you a supplements company? What gyms can you work with? Do you sell eyeglasses? Where can I get my eyes tested?

• Gamify the rewards pipeline.

⇒ If Pokemon GO proved one thing, it was that we all love games! Make it fun to build points and win tangible rewards. Create a leaderboard and encourage repeat purchase, but remember to;

a. Keep it legal
b. Ensure it fits with your brand personality

Our final word on Customer Loyalty Programs is to make it intuitive and always ensure you’re delivering something that makes your customers feel special.

What you’re offering should be attainable and add value every single time. If it feels like too much of a task, discover ways of automating this part of your business or potentially outsourcing.

To put the value of customer loyalty programs in perspective, Amazon attributes a large part of its ongoing, repeat business solely to its Amazon Prime program, while the 2016 Bond Loyalty Report revealed that 66% of consumers are prepared to spend more to earn more rewards.

3. Incentivize Customer Accounts

If you want customers to buy from you again, setting up an easy to use account is worth your time, and more importantly, theirs. Food delivery sites are well aware of this, with most understanding the value of retaining every customer after first purchase.

Who wouldn’t want to skip through the hassle of entering the same information time after time, and be eligible for one-off discounts or coupons?

Proceed with caution, however.

The last thing you want to do is get in the way of the initial purchase behavior, so we recommend a guest checkout procedure for the first-time buyer, especially if your product is of a retail nature.

The bottom line is: don’t be a hindrance to conversion. Get out of the way of first purchase and be sure to give the opportunity to create a user account that adds value, first time, every time.

4. Get Better at Cross and Upselling

Again in this instance, we needn’t look further than Amazon, who attribute up to 30% of their business to their supremely well-honed ability to cross and upsell their massive customer base.

This means selling a customer something extra (complementary), or something different (better), and generally work well on lower priced items.

Bearing in mind that lots of customers will wait for a sale event before purchasing, it’s important not to fall into the trap of training your customers to do exactly that.

Instead, at the checkout, offer related products or perhaps a discount with the chance to ‘pay it forward’ to a friend.

You can integrate upsells and cross-sells into your customer service too. On the basis of customer inquiry, make product suggestions via a live chat plugin.

customer support pop up making a product suggestion via live chat

For an effective beginner’s guide to cross-selling and up-selling, read this article on The Future of Customer Engagement and Commerce website.

Again, tread carefully.

Suggesting that customers increase their total order value by an amount more than 25% of the original order could easily become an obstacle and obstruct the original purchase behavior.

5. Use Transactional Emails

We shouldn’t need to convince you of the value of transactional emails.

Email is a critical tool in developing and maintaining a relationship with your customers. Ignore it at your peril.

Monetate gives us a reminder of emails rate of conversion in comparison to other sources.

ecommerce conversion rates by traffic source

Transactional emails refer specifically to the order and delivery confirmations that establish trust, show professionalism and instill confidence in your service.

Sending these is a sure-fire way to encourage repeat purchase. Even if they don’t get opened, their existence is reassuring.

Via email, customers can be made aware of new release items, exclusive sales, and receive coupons to redeem for value. Once again, it’s about creating value and enhancing the user experience.

Additionally, these types of emails should be automated or triggered.

Read our article 7 Trigger Emails You Should Be Using For Your Ecommerce Store to learn more about the value of these.

6. Surprise & Delight Customers

It’s difficult to go above and beyond for everyone, but you can choose your moments.

Whatever niche you operate in, an unexpected gift is a great way to remind ‘lapsed’ customers to come back. Based on the simple philosophy of every positive action creating another, it gives the opportunity for customers to respond in kind.

Digital gift certificates are a great, simple example used by many, but you might like to go further to show how important your customers are to you.

Here’s an example of a towing service that wrote a personal note after working on a customer’s car.

thank you note card

If you think about the last time you were truly knocked off your feet by excellent service, ti’s more than likely that you went back right?

We also love the example of Peter Shankman from several years ago, who put out this tweet as a joke:

twitter joke by Peter Shankman
Far from being a joke, the post was eventually shared 16,000 times of facebook and twitter when Mortons showed up at the airport with a free steak.

Not a bad result for a small investment.

7. Utilize Social Media

The last example leads in beautifully to this.

When it comes to the ‘social pipes’, an engaged customer is much more likely to be a repeat customer.

Social media is about building relationships and taking advantage of what marketers might consider ‘low-hanging fruit’.

Creating fans is important.

These people are often your most loyal customers and brand ambassadors. Like we said at the beginning of this article, they’ve given you permission to speak to them, so it’s important that you remain socially active where they are – on Facebook, Instagram, Linked In and Twitter, for example.

loyal customer endorsing a product

Remember not to overkill the time spent on these mediums though. For example, Facebook will only show your message to between 5-10% of your audience, meaning you’re forced to increase the frequency of your posts. Which is mostly good for Facebook, but not for you.

8. Send Personalized Newsletters

As much as possible, increase the personalization of your newsletters.

Remember, your subscribers have asked to stay in touch with you, so they literally want to receive these, but make sure the content you deliver adds value.

We wrote about the value of personalized emails in a recent article called How Personalized Emails Will Increase Your Profit.

To start with, track cookie data on your site and wherever possible make recommendations that take into account purchase history, related products and browsing history. A personalized newsletter always encourages longer site visits and increase the likelihood of conversion.

Netflix does this well.

personalized email newsletter by netflix

Their recommendation engine is responsible for 75% of the movie choices Netflix customers make. Anticipating your customer’s needs is extremely valuable.

Mining the data available to you is also a vital part of personalization. As we said, a customer’s purchase history should generate recommendations to include in your newsletters that are relevant, targeted and specific.

Avoid sending newsletters offering discounts on products the customer just bought at full price!

Final Thoughts

Finding new subscribers is difficult.

As online marketers, we all want to achieve this but soon realize based on the type of information we’ve just presented, that our money and focus is best served to hold on to the customers we already have.

As methods marketers should use to improve customer retention, the above steps will quickly begin improving average order value, purchase frequency and by default, attract more subscribers; the three ‘retention multipliers’ to supercharge your performance.

Don’t get blinded by an expensive and time-consuming customer acquisition cycle.

Instead, stay focused on your existing customers and the quality of the experience you’re delivering.

Good Luck!

The MageMail Team

Like what you're reading?

Download our FREE PDF with our 12 tips to upsell their customers at the checkout!

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