eCommerce business owners may view acquiring new customers as a shiny new toy, but keeping the customers that you already have is just as important - if not more so. Instead of gunning up customer acquisition at the expense of customer retention, focus on harnessing effective customer retention strategies to increase your customer retention rate and customer loyalty.
According to a study done by Bain & Company, boosting your customer retention rate by only 5% can translate into an increase in profits by 25-95%.
Customer retention is like a puzzle. Every customer that you keep is like a piece of the puzzle, and every piece needs to fit perfectly into place. With the right customer retention strategies, your puzzle will be complete.
Customer retention refers to the ability of a business to keep its customers over time. This includes both customer loyalty and how likely they are to continue doing business with the company. A high customer retention rate indicates that customers are actively engaging with the brand, as opposed to one-time purchases or limited-time interactions.
It’s important to note that customer retention should not be confused with customer satisfaction. Customer retention is about the long-term relationship between the customer and the brand, while customer satisfaction is about how well the individual customer experience was.
Leveraging customer retention strategies is key to keeping your customers engaged, building loyalty, and increasing their lifetime value.
To calculate your customer retention rate, you’ll need to start by working out the average number of customers who are still buying from you over a given period of time.
The formula for calculating the customer retention rate is:
(Total number of customers at the end of a period - Number of new customers during that period) ÷ Number of customers at the beginning of the period)
Once you have your customer retention rate, you should track it over time. Recording and examining customer retention analytics data will help you to identify where improvements are needed and allow you to track the success of your customer retention strategies.
Investing in customer retention marketing pays dividends in the long run. Your existing customers are much easier to convert than the ones you are trying to acquire, and it costs less too. Knowing why you need to invest in customer retention strategies is the first step to creating a successful customer retention program.
Humans are hard-wired to like and trust those that are familiar. Your customer's positive brand experiences are shared among their family members, friends, and colleagues, turning them into your brand ambassadors.
With $6 trillion of customer spending generated annually by word-of-mouth marketing, it remains one of the most powerful forms of eCommerce marketing. Having customer retention strategies in place will increase the chances that your customers will become brand ambassadors for your company.
Retaining customers allows you to increase your average order value (AOV), as it’s easier to upsell and cross-sell down the line. Customers who are already in love with your products are more likely to increase the size of their orders and buy from you again.
Acquiring customers can be expensive and time-consuming. 82% of companies say that customer retention is cheaper than customer acquisition. Retaining customers can save you money and increase your profitability in the long run. Despite this, companies still chase new customers while sacrificing the resources needed to nurture the customers they already have.
The benefits of customer retention are numerous, but to increase customer loyalty, you need to have a customer retention strategy in place. Here are the best customer retention strategies that will help increase customer loyalty and increase your customer retention rate.
Onboarding your new customers should be methodical, smooth, and personable, offering no hiccups along the way. New customers must feel welcomed and valued without the fear of purchasing from an unprofessional brand that causes more harm than good. Mishandling of personal information or bad customer service can easily detract customers from staying with a brand while leaving a bad taste in their mouths.
Instead, aim for a seamless customer onboarding experience and increase your customer retention rate by offering an educational, individualized, and personalized welcome. For instance, in addition to offering helpful style guides and FAQs, Mejuri provides customers with everything their customers need to know about how to use their quality jewelry items to elevate their style.
Therefore, your business's flawless onboarding process should include email automation, help guides, product tutorials, and personalized content such as exciting SMS and high-converting emails to get your customers pumped up for their purchases.
Who doesn't enjoy being made to feel special?
Create a personalized experience for your customers that resonates with their individual needs, allowing them to feel that your business cares about them and that it considers their needs when making decisions. From creating personalized customer accounts to taking advantage of dynamic content, a personalized experience speaks directly to your customer's needs and increases the chances of them making a purchase.
The more personalized your customer experience is, the more likely it is that your customers will come back for more.
Trust is the foundation of any customer-business relationship, and it's essential that your customers feel comfortable and confident when shopping with you. However, the caveat of developing brand trust is that it takes time and doesn't happen right off the bat (even if they have already purchased from you).
Take the time to nurture relationships with your customers, as 62% of them are likely to remain loyal when a brand does so.
Building brand trust takes effort, but it’s worth the rewards you reap.
So start by being transparent about who you are and what your business does. For example, having a detailed About Us page that dives into your brand mission or vision, the founder's message, and even showcasing team members' pictures can give your customers a sense of familiarity and understanding.
Be reliable, honest, and consistent in your customer service, communications, and branding. Bliss, for instance, maintains a colorful, bright consistent color scheme and brand voice as they tell its brand story and relate to their customers
Your customers' opinions matter. Let them know that.
Use customer feedback as a tool to better understand their pain points and preferences. Surveys, polls, product reviews, and newsletters can all help solicit feedback from them regularly.
Gather feedback from customers to improve customer retention and gain insights on how you can make their customer experience better.
A company newsletter is like a roadmap for customers to follow. It not only gives them an overview of the various products being offered, but it also provides insights into what's happening with the company and how to make the most of their products.
By sending out informative newsletters regularly, you can help keep customers informed on what's going on within your business while also creating a sense of community with them. Don't forget to keep them fun and interesting so your customers look forward to reading them!
Let's look at an example. Dollar Shave Club has a newsletter that not only provides content related to their products but also gives advice on how to make the most out of them. It even includes funny stories, jokes, and customer success stories which increase customers’ loyalty toward the brand.
Customer Relationship Management (CRM) software can automate mundane tasks, track customer interactions, and identify trends in customer behavior to increase customer loyalty.
By using a CRM, you can create an organized system for managing customer data in one place. This allows you to segment customer data into specific groups and increase targeted marketing campaigns. Moreover, you can leverage a CRM as a tool for tracking customer satisfaction and feedback. What's more, you can create support tickets to ensure customer issues are resolved quickly and efficiently.
CRM software also automates repetitive tasks like emailing customers about special offers, sending thank-you messages, and informing them of new products. All these activities increase customer retention in the long term.
Educating your customers can go a long way in improving customer retention. This is because customers are more likely to remain loyal if they understand and appreciate the product they’re using.
This means that you should be offering learning opportunities, such as webinars, tutorials, and product demonstrations. Providing customers with the tools and resources they need to increase their understanding of your product or service will increase customer retention.
If you're running an e-commerce store, for example, you could create a blog that shares tips and tricks on how to use the products. This helps increase customer retention by giving customers the information they need to increase their product knowledge.
Freez is an Australian-based online clothing store that offers informative and engaging blog posts on how to style its product offerings. By providing helpful information, Freez's customers can navigate their different options and bring their unique fashion styles to life.
Humans thrive on relationships, and unifying your customers into a single community around your products is an effective way to increase customer retention. A sense of belonging can increase customer loyalty especially when they feel connected to the brand, its values, and their fellow customers.
You can create a community around your product or service by providing a platform that encourages customers to interact with each other and increase customer loyalty. A social media group, community forum, or referral program is an easy customer retention marketing strategy to start.
For example, Sephora has an online community forum called Beauty Insider where customers can ask questions and share tips. This connection not only makes the brand seem more humane and personable but also encourages customers to relate to their fellow customers.
Customer retention for small businesses should not be taken lightly. To increase customer loyalty and keep customers coming back, businesses need to focus on implementing effective customer retention strategies.
Nurturing relationships with your customer takes time; it's not a quick hack. Instead, you should take the time to develop a customer retention marketing plan that is tailored to your business and its customers. By investing in the right customer retention strategies, your bottom line can reflect your efforts.
Having an all-in-one solution can help you navigate customer retention analytics. Triple Whale is a customer eCommerce attribution management platform with integrated analytics, attribution, and creative capabilities that can help you oversee your customer journey from acquisition to retention, and increase customer lifetime value. With Triple Whale, you can increase customer retention and maximize your ROI.
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