What’s the one thing every business survives on but takes for granted most of the time? Customers, right? But just having customers is not enough. Retaining customers helps businesses stay longer in the cutthroat competition. Customer retention is a crucial aspect of the business that lies at the core of developing a resilient and loyal customer base for your brand.
Did you know that small-scale businesses gain over half of their total revenue from repeat customers? And the key to repeat customers? A smart customer retention strategy that keeps them coming back for more.
In a business, be it online or traditional retail, engaging new customers is always a tough job, but making those customers stay longer with your business is an even more critical job. Because until and unless your brand is bringing quality into the lives of your customers, they will display no interest in making a repeat purchase, let alone work-of-mouth marketing.
So it all comes down to making your existing customers stay longer in the business by implementing consistent customer retention strategies. But how to start in the first place? What measures can you implement in your eCommerce business to gain leverage in the tussle of eCommerce? This blog will cover all your queries!
What is Customer Retention Strategy?
When your business gains a new customer, the real work starts right there and then: gaining their confidence and loyalty in your brand. All the measures taken to further this task fall under customer retention.
To define it, the ability of a business to maintain customers over time, or customer loyalty, is measured by customer retention. In addition to determining the number of loyal consumers, it can also indicate or forecast brand loyalty, customer engagement, repurchase behaviour, and customer happiness. Usually starting with an initial encounter, customer relationships encompass all ensuing transactions, purchases, and other interactions.
After measuring customer retention, businesses can use the feedback to analyse data on customer experience (CX) components and the success of their brand. For instance, an organisation can use the reported decline in client retention to determine the underlying cause and modify its offerings of goods and services.
Customer retention in eCommerce is more profitable than obtaining new ones, as a just 5% improvement in customer retention can result in a 25-95% rise in your overall business revenue.
But customer acquisition is equally important for better market expansion of your business. So what’s the difference then? Let’s find out!
What is the Difference Between Customer Retention and Customer Acquisition?
Customer retention deals with making your existing customers stay loyal and consistent with your brand by offering exclusive offers and discounts, better communication, retention marketing, etc.
Customer acquisition, on the other hand, is the step-by-step process of filtering, attracting, and converting prospects into loyal customers or buyers. This often involves steps like e-mail marketing, SEO, social media marketing, Pay-Per-Click (PPC) advertising, and so on.
As per statistics, acquiring a new customer is always five times more expensive than retaining an existing one. So let’s look into the most effective ways and measures to pump up your customer retention game.
What are Some Effective Customer Retention Strategies for Your Online Brand?
Here are some effective strategies to enhance customer retention and build lasting loyalty for your eCommerce brand.
-
Level-Up Your Onboarding Process
Since onboarding is the first step towards bringing in your customers for better retention, it becomes crucial to make your onboarding process simple and easily doable. For which you can make it more interactive and helpful.
You can make it better by sending an informative and interactive guide video to help your customers navigate the onboarding process. Send them a reminder message to complete their onboarding process.
-
Build a Customer Loyalty Programme
A customer loyalty program is a tactic used by brands to entice and keep repeat business by providing rewards, discounts, and other incentives to customers. Building loyalty is the goal of these programs, and when done correctly, it pays off.
75% of people prefer brands that offer rewards programs, according to studies on customer loyalty programs. It provides customers with an extra incentive to remain brand loyal because they are benefiting from their ongoing business.
-
Upscale Social Media Marketing
Social media is the gold mine for marketers today, and there is no better way to engage with your customers than social media sites like Instagram, LinkedIn, Snapchat, X, Facebook, YouTube, etc., and boost your customer retention.
What could be the best way to inculcate the feeling of being appreciated, valued, and important to your customers than reposting user-generated content (UGC) on your brand’s social handle? Express your gratitude towards your existing and old customers via consistent posting on social media platforms. But before you go ahead, don’t miss out on planning your content strategy in accordance with the demand of the platform you choose.
-
Craft a Solid Referral Program
Referral programmes are key to measuring the efficacy of your customer success and your brand standing. If your brand matters to your existing customers, there is a high chance of them bringing in new customers by referring them to choose your brand.
Now your job here is to offer them an attractive and compelling referral program which brings them either monetary or non-monetary benefits. Include benefits like coupons, discounts, cashback, etc. enhance their positive experience with your services and motivate them further for referral.
-
Effective Packaging and Labelling
Effective product packaging and labelling go beyond just protecting products—they play a crucial role in shaping customer perception and building brand loyalty. Thoughtful packaging enhances the unboxing experience, while clear, attractive labels can communicate your brand’s values. A well-packaged product not only stands out but also reinforces trust, encouraging repeat purchases and positive word-of-mouth.
-
Create Post-purchase Experience
Since the post-purchase approach is the last interaction a company takes with its customers, it is essential for effective customer retention. Businesses may strengthen customer satisfaction and loyalty by making sure that the post-purchase experience is smooth and fulfilling.
For building solid long-term customer retention strategies, several factors like recurring business, favourable word-of-mouth marketing, brand advocacy, and so on are like life and blood. So when you offer a post-purchase experience to your regular customers, you are enabling all these factors to work!
-
Try Offering a Subscription-based Platform
If you want to increase your brand awareness and make your customer base thrive, offer well-crafted subscription plans which are attractive and full of benefits. If any customer would take an interest in subscribing to your offered plans, it will certainly be the diverse benefits which you would be offering them.
Amazon Prime is the best example of this. They prioritise their subscription-based offerings by giving customers same-day delivery service for all essential products on Amazon. This appeals to the customers to buy their subscription plans.
-
Switch to Personalisation
80% of customers are likely to stick with brands that provide them with experiences customised to their interests. So you better start adjusting your service to your customers’ desires today!
Make use of the customer’s information to learn about their preferences and desires so that you may customise their experience. Companies like Netflix and Spotify, which tailor their recommendations according to their customers’ preferences and interests, are the real role models for you to learn this art. In reality, Netflix has stated that its goal is to satisfy every customer by providing them with stuff they like and long for. That shows an honest commitment to customer retention that works!
How Can You Measure the Success of Your Retention Strategies?
Now, a crucial question to ask yourself after you’re done implementing customer-retention strategies in your business is- is it actually working? If yes, then how do you measure the success rate of your customer retention strategy? Are there any metrics to measure customer retention rate?
Here’s how you can do it:
Customer Retention Rate (CRR)
The percentage of customers who remain loyal to a business over time is known as the customer retention rate, or CRR.
Here’s how to figure it out: Select a period (often a month or a year), deduct the number of new clients acquired during that time from the total number at the end, divide the result by the initial number of clients, and multiply the result by 100.
Repeat Purchase Rate (RPR)
The percentage of existing consumers who make another purchase within a given time frame is called the repeat purchase rate (RPR), sometimes referred to as the repeat customer rate (RCR).
How to figure out the rate of repeat purchases: Select a period, divide the number of repeat customers by the total number of customers, and then multiply the result by 100.
Churn Rate
The percentage of customers who leave within a specific time frame (often one month or one year) is referred to as the customer churn rate, or user churn rate, commonly used by SaaS and subscription-based businesses. Use this formula to calculate the customer churn rate:
Customer churn rate = (Number of customers who left / Total number of customers at start of period) x 100
Customer Lifetime Value (CLTV)
The overall value of a client throughout their association with a business is estimated by customer lifetime value, often known as LTV or CLTV.
To calculate CLTV, use this formula:
Customer lifetime value = Average order value x Average number of purchases x Average customer lifespan
You can also use other metrics like Customer satisfaction score (CSAT) and Net Promoter Score (NPS) to measure your customer retention rate and utilise the right data to improve your performance.
Conclusion
One of the most important parts of customer retention in eCommerce is being consistent and honest with your customers and there is no doubt about it. It’s easy to approach customers with the right intent in the first place, but offering the same quality of service thoroughly is tough! But once you master that art, you unlock the first step to bringing your customers closer to your brand.
On the road to customer retention, the ups and downs are certain. But if you are willing to learn the art of customer success, the journey becomes easier. And if you ever face difficulties in shipping, NimbusPost has got your back with future-ready logistics solutions!
FAQs
-
How can I personalise my customer interactions?
In an eCommerce business, effective interaction is all about researching the geography, culture, and values of your customers. More than anything, understand their personality. Gather data about their first purchase and the kind of products they bought, and send them gratitude messages for making a purchase. You can also use a regional language to better engage your customers via social platforms or SMS marketing.
-
What types of loyalty programs are most effective?
- Point-based loyalty programs
Loyalty programs based on points are a tried-and-true strategy for retaining customers. Every purchase is rewarded by these programs with loyalty points, which users can collect and exchange for thrilling benefits like freebies, free shipping, or access to exclusive promotions.
- Value-based loyalty programs
By rewarding behaviours that are consistent with your brand’s values—such as community service, sustainability, or social responsibility—value-based loyalty programs aim to strengthen your bonds with your clients.
- Tier-based loyalty programs
Customers are categorised by their purchasing patterns or levels of engagement in tiered loyalty programs, which offer gradually more significant incentives as they advance through the tiers.
-
How can I reduce customer churn?
Here are several easy ways in which you can bring down your customer churn rate:
Analyse the root cause: It’s always better to talk and address the problem than to stay mute and cover up the damage done! Always connect to your customers and find the reason for them leaving your service. Stay active over calls, SMS, email, or social media to communicate with your customers and dig deeper into what’s not working for them.
Engagement: Keeping your customers informed about the benefits of your services and products and the value they bring to them is a must! So keep them updated with that information.
- Educate: Provide free product demos, webinars, video tutorials, and training—do whatever it takes to ensure your clients feel educated and at ease.
- Offer incentives: It is considered effective in bringing down the churn rate in business. So, offer them discounts and special offers from time to time.
-
Why is customer feedback important for retention?
To ensure customer satisfaction and retention, you need to ensure that your customers feel heard and understood. To show them that you value their preferences and choices, their feedback matters a lot. Therefore, recording post-purchase experience is crucial for better engagement and retention.
-
How can building a community help with retention?
Community building in customer retention marketing is the key to amplifying belongingness between your customers and your brand. Communities greatly increase customer retention rates by fostering a sense of emotional attachment among your customers.
-
What are some examples of rewards and incentives for loyal customers?
Here are some examples of rewards and incentives:
- Free shipping
- Gifts on bulk orders
- Fast shipping
- Money-back guarantee
- Discount on repeat purchase
- Gift cards
-
What is omnichannel support, and why is it important?
Omnichannel support offers a smooth user experience by integrating all of your channels. This covers social networking platforms with live chat, email, online communities, and more.
The following are some advantages of omnichannel support:
- Improved understanding of customer behaviour across support channels.
- Boost earnings and enhance client retention.
- Increase customer satisfaction and expedite ticket resolution.
