Nine Strategies for eCommerce Stores to Boost Customer Retention Rates

Posted on September 4, 2015 by in Tips & Tricks | 10 comments

Nine Strategies for eCommerce Stores to Boost Customer Retention Rates

In the business world, there’s one particular worst-kept secret that’s always interested me: it’s cheaper and easier to convince existing customers to buy from you again than it is to attract brand new customers.

Despite this, many business owners continue to splurge large portions of their marketing budget on customer acquisition. These owners are missing a trick, however, as customer retention is by far the more cost-effective approach.

To some extent, I get it: large numbers of customers look great on paper. “Great on paper” doesn’t cut it, however, as the only number that really matters to me is my bottom line.

Don’t get me wrong: you will always need new customers. When you’ve spent good money on customer acquisition, though, it makes little sense to just discard the successes. By investing some time and money on customer retentions, you protect your initial acquisition investment by increasing customer lifetime value – something that all smart business owners understand.

The statistics in support of customer retention certainly make for impressive reading:

  • A 5% improvement in customer retention rates boosts profits by between 25%-95%.
  • 82% of businesses believe that customer retention is cheaper than customer acquisition.
  • According to Marketing Metrics, the average conversion rate for a first-time buyer is between 1%-3%. For repeat customers, these figures jump to a staggering 60%-70%.
  • The longer a customer has been buying from you, the higher their average order value and the greater the probability that they will buy from you again.
  • 40% of an eCommerce store’s revenue is generated by 8% of its customers. The 8% are your loyal, repeat customers, so look after them.

Now that you’re sold on the benefits of customer retention, you’re probably wondering how to go about it. Well, you’re in luck! Today, I’ll be sharing nine effective, bottom-line-enhancing customer retention strategies.

1. Email Marketing

The online world has gone list-building- and email-marketing-crazy, and with good reason: for years it has been one of the most cost-effective ways for a business to drive conversions. This is especially true in the eCommerce world.

But why is email so effective? Well, for a start, an email goes a long way towards keeping your business at the forefront of your customers’ minds. The email makes them think of you, and this ensures that your brand immediately springs to mind when they’re making a purchasing decision.

By putting yourself out there regularly, you also give yourself the opportunity to capture impulse purchases, too. If a person is sat bored at work, an intriguing offer is likely to be well-received. If timed right, there’s a good chance that person will jump onto your website and (hopefully) make a purchase.

This is why email marketing works so well. It allows you to develop a sense of familiarity with your customers, as well as nurturing a relationship. And, if you consistently send insightful content to your list, you also position yourself as an expert in your field. These are all positive emotions to have associated with your business – emotions that are proven to drive conversions.

My tip to you: make sure you’re collecting emails at every opportunity – for both new and existing customers. Afterwards, reach out to your list regularly and consistently. A great way to achieve this is to send a regular newsletter to your list.

2. Loyalty Program

If you want to encourage loyal, repeat customers, consider implementing a loyalty program – the clue is in the name!

This approach is particularly prevalent in the offline world, utilized by many big brands. For example, a coffee shop might offer a customer’s tenth coffee on the house. Other shops offer loyalty points for each order — the more you spend, the more points you earn. Customers can collect these points and exchange them for money off their next purchase.

If a customer is working towards a specific loyalty reward, they have very little reason to consider shopping elsewhere. Whether you’re offering a free item or loyalty points, customers are well aware that they are effectively forgoing their loyalty bonus when they shop with a competitor. As such, they keep coming back to you.

WooCommerce Extension Screenshot

If you’re using WooCommerce, you have a number of options for running a loyalty program. This includes WooThemes’ very own WooCommerce Points and Rewards extension, available for $129. If you’d prefer a more affordable option, consider SUMO Reward Points ($30) or Loyalty Rewards for WooCommerce ($23), both available from CodeCanyon.

3. Easy Repeat Checkouts

One of the key ingredients of maximizing sales is a frictionless checkout.

Of course, for a first-time buyer, some form of checkout process is inevitable. You need to collect the customer’s email address, physical address, and payment details. This intrinsically involves a number of hoops.

Going forward, however; repeat purchases can be far more streamlined. After all, you already have the customer’s key details – provided you’ve been given permission to store them, of course.

The best example of this is Amazon. Their one-click repeat checkout procedure is as streamlined as possible – literally just a single click. It’s resulted in me buying far more products than I otherwise would have – and that’s exactly the result you’re looking for.

4. Special Offers

Online customers love a good bargain – it’s why Black Friday is the busiest shopping day of the year.

Of course, you should be offering promotions to entice new customers to shop with you, but it doesn’t hurt giving your existing customers the best deals of all.

This works for two reasons:

  • We already know that your existing customers are more likely to buy from you. A special promotion aimed just at them may be just the incentive to entice them back.
  • By offering a promotion only to existing customers, you are communicating that you really do appreciate their custom. This increases goodwill towards you, which increases loyalty.

If you’re actively collecting your customers’ email addresses for a list, this should be relatively easy to implement. Then, all you need to do is send an exclusive promotional coupon code to all the customers on your list.

5. Subscription Business Model

Selling subscriptions is big business right now. It’s a business model that’s currently huge, with lots of online retailers successfully selling subscriptions for a range of products — The Dollar Shave Club is one of the best-known examples.

Dollar Shave Club screenshot

For those of you looking to boost customer retention rates, a subscription business model has customer retention effectively built-in. Sure, some customers might cancel their subscription after month one, but the default position is that the customer will continue buying from you indefinitely – that’s also good news for your customer lifetime value metric.

But how do you know if your business can benefit from the subscription business model? Well, you won’t know until you’ve tried it! Generally speaking, however, it works best for products that we use regularly and run out of, or that we would always like more of.

This business model has been implemented successfully in a variety of industries, most notably:

  • Shaving products
  • Underwear
  • Toiletries
  • Coffee
  • Food
  • Clothing
  • Pet supplies

Think outside the box, though, and you could have the next big subscription business on your hands.

6. Right Place, Right Time

If you sell perishable products, you can take advantage of the typical lifespan of your products by carefully timing a marketing email or unique promotion.

Let’s use an example to illustrate: your business sells, say, electric toothbrushes. Extensive testing has shown that your electric toothbrush will last, on average, 18 months with twice daily use.

Armed with this knowledge, you can time your marketing efforts for the maximum chance of success. When is the magic time? Well, as you’re approaching 18 months, of course.

Get in touch with a customer too early and they won’t need a new toothbrush. Wait too long, though, and they might have already replaced their toothbrush.

If, however, you start your marketing efforts around the 15 month mark, you’re targeting the customer at the exact time they will be needing your product. This is why this strategy is commonly referred to as “right place, right time” marketing.

7. Customer Service

I talked about customer service extensively in my last post, so I won’t go into too much detail here.

What I will say, however, is that a quality customer support service fixes your customers’ problems and keeps them happy. Keep your customers happy and they will never feel the need to shop elsewhere – you’ll have a customer for life.

8. Receiptful

By now, we’re all well aware of the importance of email marketing in an eCommerce store’s efforts to retain customers. Despite this, most store owners miss the opportunity to leverage by far your most-opened automated email: your receipts.

The vast majority of your customers will open a receipt sent to their inbox – to reassure themselves that the order is correct and to avoid fraudulent payments. Even so, most business owner aren’t using their receipts to add value to their business.

If you want to put your receipts to work for you, consider signing up for Receiptful. In my opinion, Receiptful is one of the more innovative way to increase the all-important customer retention metric. This is achieved by adding customer coupon codes, upsells, and related products to your receipts. You can also use it to style your receipts to make them more eye-catching.

Receiptful Screenshot

The Receiptful service is available for free, although you can upgrade to a paid version if you want to access the premium features. Receiptful can be integrated with most of the top eCommerce solutions, including WooCommerce.

9. Exceed Expectations

Of course, all the strategies featured in today’s list, while effective, will only work if you’re already providing a really great service. This means that you should be providing high quality products/services (including stylish, memorable packaging), outstanding customer service, and great value for money.

More than anything else, if you can consistently exceed your customers’ expectations, you don’t give them a reason to consider shopping with anyone else. Customer retention happens organically.

Final Thoughts

If you want to maximize your business’ marketing budget, make sure you allocate some funds to customer retention.

Not only does this protect the money you’ve spent on customer acquisition, but it’s also one of the most effective ways to improve your business’ bottom line. In other words, it’s a tactic that all businesses should be implementing.

Do you have any other tips for boosting customer retention rates? Share them in the comments section below!

Image Credit: BoBaa22 / Shutterstock.com

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10 Comments

  1. Great post, lots of good tips in there!

    Receiptful is great, I’ve been using for a site since the beta. However, it started incorporating features that another plugin offers called Graphflow.

    Graphflow is a superior plugin, that is both cheaper, more customisable & functional: http://graphflow.com

  2. I bought a theme from one popular theme provider. There strategy in retaining customers is bottom rock discounted renewal rates for renewing customers.
    This discounted price is backup by an excellent customer service. Every now and then I received offers through email newsletter of new plugins at discounted rates. I sometimes buy which makes me a repeat customer and the company successfully retained me as their customer which makes their retention rates high.

  3. Great article. thank you Shaun.

  4. awesome, thanks !

  5. Awesome article, really help full for everyone who done Ecommerce business.

  6. Great blog. Full of good tips especially the recieptful part. @simon harper thanks for the tip will check out graphflow.

  7. Excellent post Shaun! Cool that you mentioned Dollar Shave Club. I’m a member and I’ve always thought that their branding and marketing is absolute genius.

  8. About #3. I would never suggest someone to store the credit card info of any client in a WP site. You need to have a dedicated security guy if you’re willing to do that.

  9. About #3. I would never suggest someone to store the credit card info of any client in a WP site. You need to have a dedicated security guy if you’re willing to do that.

  10. Really useful post thanks. Combining these tips will be a great way to create an effective customer retention strategy for an e-commerce website. Receiptful is an interesting idea which I haven’t heard of before – I will have a look at this for one of our WordPress clients with an e-commerce website.

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