Do you have a strong customer base for your eCommerce business? Or are your customers floating in uncertainty whether to buy from you or your competitors?
Without customers, your business will just be a static structure, restricted and constrained in your own corner — it doesn’t even matter whether it’s online or offline.
‘A Customer is King’ and ‘A customer is always right’ are well-known proverbs stressing on the worth of a customer to your shop or eStore.
Japanese and Indian culture even embody customers as God.
Ever wonder why?
Because customers are your greatest problem solvers.
As a simple reader, you may not realize the importance of the customer and may mock the above proverbs but in case you are a businessman, or own a brick or mortar or eStore, you will certainly know the value of every single customer.
It’s not about the money that makes customers valuable, it’s about the progress and growth of your dream business.
The biggest loophole in this aspect of eCommerce businesses is poor customer retention. Your customers tend to leave you after a few initial interactions.
Having poor customer retention is deadly for your eCommerce business. But, you must not worry as I assure you that with proper customer retention strategies, it’s possible to increase customer retention to a considerably high rate and make your eCommerce business lively and customer-crowded.
This article is focused on building a strong customer retention mechanism for your eStore. Along with this, it empowers you with the knowledge to better understand the methods and process of customer retention and risks of not taking it seriously.
Table of Contents
What Is Customer Retention?
Customer retention is the measure of your capability to glue your customer to your products or services willingly for repetitive purchases.
In an official tone, customer retention is your ability to keep your customers engaged with your product or services for recurring purchases.
It’s not easy to retain customers in this highly competitive eCommerce world. You put your attention down for a second and the next moment your customers are gone under the umbrella of your competitors.
But it’s not impossible as well. A well-planned and timely customer retention campaign can have a magnificent impact on your business growth and revenue.
Let’s first understand the idea of customer retention with the following analogies:
1. Retaining Water In A Cracked Bucket
Can you carry water in a cracked bucket? And how far?
Not far. Right!
You need to fix this crack.
“Fixing this crack to avoid/reduce the loss of in-bucket water is what customer retention means in the eCommerce world
Whereas filling the bucket, every time with freshwater is customer acquisition.”
You need to realize this for your eCommerce business and need to fix it as soon as possible with proper and effective customer retention strategies which we would discuss later in this article.
2. Re-Establishing The Drying Tree
Imagine you have a half-dead grown-up apple tree in your garden. All it needs is a month of regular care, manure, and water to get it back to blooming life. Also, you have vacant land for planting a new apple tree in the same garden.
Now, between re-establishing the dying apple tree and planting a new tree — which one can give you fruits earlier without much effort?
Of course, the fully grown tree, if brought back to life, will soon be laden with apples whereas the new tree will take 4-8 years to grow and produce a considerable amount of apples.
Environmental Disclaimer: I am not against planting trees. Environmentally, both, planting new trees and caring for old trees are always holy work and must be heart-ly done.
Planting new trees is customer acquisition whereas nurturing your existing trees so that they remain alive and fruitful is customer retention.
Customer Acquisition Vs Customer Retention
Customer acquisition and retention have always been in debate in the market. Some business executives implement acquisition while others focus on retention and yet both make great profit and success.
Should you focus on retention or acquisition depends a lot more on the category of your business.
- If your firm provides services or sells products that return high profit from each individual sale, then customer acquisition is the right choice for your business.
For example, If you have a real estate business, then making a second sale from the existing customers is much less probable and hence retention is not of much profit in such situations.
- In case, the lifetime value of your customer matters more than individual sales, then focusing on retention is the right choice for your business.
For example, if you have an eStore of cosmetics, clothes, books, electronics, or other everyday-use products then retention is a MUST for you.
Let’s look at some major differences between the two:
Customer Acquisition
- The acquisition is mostly achieved by paid ads, promotions, marketing campaigns, etc., and hence it is much costly.
- Customers approach your product and services based on their needs, supported by your discounts and offers.
- Convincing a new prospect is not easy and hence it’s a time taking process.
Customer Retention
- Retention can be achieved with some regular healthy interactions and some timely rewards, so it’s not as much costly as acquisition.
- Customers are retained based on their choice. If your services/products are engaging and satisfying, your customer will remain with you.
- The probability of convincing an existing customer is higher and hence it does not take much time, but regularity needs to be maintained.
Now, we have a good understanding of what customer acquisition and retention is. Let’s jump to the next section.
Why Is Customer Retention So Important?
If you urge me to answer this “why” in one word, I would say — for survival.
Customer retention is crucial for the long term survival of your eCommerce business or eStore. There are several facts supporting it and once you consider them, you would agree with my one-word answer as well.
1. Acquisition Is More Costly Than Retention
Each of your acquired customers is a result of huge marketing expenses. You spend a lot of money on marketing and advertising or offering free gifts or high discounts to get them started with your services or product.
Marketing for acquiring customers is costly than that for retention. Stats tell that acquiring a customer costs five times more than retaining an existing customer.
Losing an existing customer is losing all the costs you spend on acquiring them.
As we see in our previous analogies, simply sealing the crack in the bucket and retaining the water is more easy and economical than buying water every time to fill the bucket.
2. For Strong Customer Relationship With Authentic Personal Taste
Every relation begins with a need. The nature of interaction and the degree of fulfillment turns this need-based relation into a choice-based relation.
This transformation from need-based to choice based is the transition of your acquired customer into retained customers.
And, it’s not an easy thing to win your customer’s heart and be their choice.
But, implementing strong customer retention strategies keeps your interaction healthy and regular with your existing customers and establishes a strong commercial relationship with them.
This commercial relationship is necessary for branding, and for gaining higher mouth-referrals.
It must be noted that a commercial relationship is not as personal as with your family and friends. Commercial relationships are more about careful service and authentic products.
A simple non-greedy profit-generating business with no unfair means may lead to strong customer relationships which, in turn, leads to high customer retention.
3. To Boost Revenue
The revenue comes from sales, no matter from whom — acquired or retained customers. But, selling to your new customer is less probable than that to the existing customers.
Stats tell that the probability of selling an existing customer is high – somewhere between 60% to 70% whereas the probability of convincing new prospects and selling them is low, between 5% to 20%. That’s a big difference.
Hence, high retention can be a game-changing parameter for boosting your revenue.
4. For Branding And Increasing Trust Factor
Becoming a brand is the dream of every business. You may try thousands of ways, create the most useful product, or offer the most satisfying services, but without a strong customer base, without winning the customer’s heart, you can never turn your business into a brand.
A brand is a title that your business achieves because of the popularity of your certain product and services amongst a huge number of customers.
There are many ways to do branding for your eCommerce business and most of them aim at improving the recognition of the business in customer opinion and customer satisfaction.
Normally, products/services are recognized by the company that sells/offers them. But, if your business is recognized by a certain product or service among a large number of people, then you become the brand of it.
It’s customer engagement that turns your product and services into brand products
5. Sustainable Development Of Your eCommerce Business
Your business resources — employees, investment, marketing techniques, and time, all are limited. This limitedness imposes restrictions on the extent of consumption.
Over-use of these limited resources will be considered as exploitation and this will be unwise for the future of your eCommerce business.
Acquisition demands five times more money than retention. The acquisition success rate is 5% to 10% whereas retention has a success rate of 50% to 65%.
Talking of time, it’s obvious that building a new professional relationship requires longer healthy interaction whereas it’s less time consuming to nurture the existing relationship — just a few timely ‘Hi/Hello’ can keep the relationship fresh and lively.
In simple terms, customer acquisition demands higher consumption of your business resources than retention.
Hence, over-focused acquisition and neglecting or underestimating customer retention would be killing your future resources and risking the future of your business.
In other words, retention is profitable in the present as well as in the future whereas acquisition is present-focused.
The Right Time To Focus On Customer Retention
If you have recently started your eCommerce business, then this may not be the right time to read this article, reading about customer acquisition will be more useful to your business at this moment.
And, once you have acquired enough customers through customer acquisition programs, you must turn your attention towards retention.
Acquisition and retention both should be timely prioritized in your marketing campaign.
In true sense, the retention begins immediately after you acquire your first customer to your business.
That is, acquisition and retention are two passengers on the same wheel, but the point that matters is:
Who is driving it and when?
In the beginning, the acquisition is the driver, whereas once there are enough customers, retention should become the driver of your marketing journey.
Levels/Stages of Customer Retention
1. Financial Bond
In this stage of customer retention, the customers are offered financial benefits such as discounts and other free cross-services to avoid churn. The business or firm uses this level of retention to get customers’ attention for other levels of retention.
It is a short term stage as the firm/business can leverage financial benefits for a particular customer to a limited extent.
2. Social Bond
This level of customer retention focuses on building social bonding with the customer. Here the business aims at increasing the interaction, understanding more of each other, and showing or generating genuine interest between each other.
This is a long term strategy level of customer retention as this level does not consume financial value and firms and businesses can afford to carry them for a longer period of time. In addition, social bonding also builds longer time profits.
3. Customization Bond
This stage is one level ahead of financial and social bonds.
It involves mass communication with the customer and developing an intimate understanding between the two. Efforts are made to turn the general customers into loyal customers.
With this bonding, the product and services are no longer of one standard but get tailored as per the customers’ needs. The price/charges become more flexible.
4. Structural Bond
This is the fourth level of the customer retention strategy and the most difficult one among all the four levels.
Mostly, this works in B2B, in which the business forms a bond intimate enough that they share a part of their business structure that is hard to break. Hence the retention becomes a part of their own structure.
What Is A Customer Retention Strategy?
A set of strategically planned measures that are taken to reduce the churn of existing customers is referred to as a customer retention strategy.
These are very important for your business because, without these, you cannot retain your customer and will face the risk of poor retention.
Top 10 Customer Retention Strategies For Your eStore
Achieving a high customer retention rate for your eCommerce business requires a strategically planned process and effort. How much you care about your customer and how healthy your interactions with your customer are, play a major role in having higher customer retention.
Customer satisfaction is the key to customer retention.
Let’s look at some of the proven customer retention strategies.
1. Use Grandfather’s Way Of Communication
Do you remember how your grandfather managed to remain in touch with you for years even after you settled in the city with your parents?
They sent regular letters and gifts to you.
We must use this grandfather’s way in your eCommerce business to remain in your customer’s mind and retain them for longer.
Email is the best way for easy and personalized interaction — perfect for customer retention campaigns.
Do you remember on what special days your grandfather used to send you letters?
You need to do the same with your customers.
Following types of emails can be sent for your customers to increase their engagement and avoid churn:
- Birthday email
- Festive email
- Reminder email
- Win back email
- Anniversary email
- Feedback email
- Thank you email
So, set up a customer calendar for your existing customers and send them regular emails and newsletters reminding them, or educating them about your products and services or branding your business.
But, it’s hard to send an email to each and every customer manually. Email automation can help you to make your task easy and quick with much perfection.
2. Be In Their Friend/Follow List Of Social Media
Social media is a great opportunity for all forms of business. There are 2.95 billion social media users and your desired customers are on many of these social media platforms.
Being in touch with them at these platforms can be a great opportunity to understand your customer’s choices and interests. The better you understand their needs, the more you can fulfill them.
It also offers the possibility of real-time support and helps in promoting the brand without being too sales-oriented.
These social media interactions keep your customers engaged with you and your business and increase the customer retention rate.
3. Loyalty Program – The Litmus Test Of Your Customers
Once a chemist accidentally put his lab on fire. And, the reason was that his litmus paper was finished, so without confirming he dropped a few drops of acid instead of the base.
Do you want to burn out your eCommerce business in the same way?
If NOT, then set up a loyalty program and differentiate your loyal customer from your regular customers and leverage them with rewards.
A strong customer loyalty program leads to a higher customer retention rate.
A loyalty program can prove to be a goldmine for your eCommerce business. There are tons of benefits and above all, it gives self-satisfaction that you have customers that are loyal to you and your services/products.
For example:
Here’s is a list of some benefits of having loyal customers:
- Loyal customers are more likely to purchase your product or services and hence they are more profitable than regular or new customers.
- They tend to provide frequent and positive feedback.
- They are more lenient and may forgive easily to your accidental poor services/products.
- Loyal customers are the best mouth-refers.
- They directly help in branding your business.
- Loyal customers need less maintenance.
There are several ways to set up a customer loyalty program to detect and award your loyal customers. You must implement at least one of them.
Considering the case of Netflix and Amazon Prime, they both have prioritized customer retention and have a huge loyal customer base that helps them to become a brand.
4. Customer Onboarding Program
An Onboarding program is a great way to reduce customer churn.
Sometimes, products/services are complex to operate and require pre-knowledge to get started. An onboarding program can be a great way to help your new customer to learn about your products and services and utilize the best of it.
Source: ChartMogul
Customer onboarding is popular in SaaS-based products, whereby offering a free trial and demo sessions, providing documentation, and direct assistance/support boost the customer engagement and finally convert or retain, increasing the lifetime value of your customer.
5. Give Your Ears To Your Customers
After using your product/services, your customer forms an opinion based on their experience — sometimes positive and sometimes negative. And, they have an urge to share it.
A happy customer will express their happiness to which you can personally return thanks. Whereas, a disappointed customer will put their queries and dissatisfaction to which you can immediately reply, sort out the issue, and win them back.
There are several other benefits of customer feedback for your online business which are listed below:
- Having customer feedback on your eStore makes your eStore look more authentic and engaging.
- The feedback reveals the in-field performance of your product and services. This information is very valuable for updating and improvement of products/services.
- Accepting feedback is an indication that you respect your customer’s opinions.
- Accepting customer feedback hence helps in boosting customer retention.
6. Be One Step Ahead Of Your Competitors
The main reason why you need customer retention is that your competitors are offering something similar which your customers might get fascinated to and leave you.
And so, the best you can do to retain your customer is to eliminate your competitors; simply by updating your product and enhancing your services to the next level.
If you are offering a valuable and unique product/service, your customer will remain yours.
Therefore being one version ahead is a great way to improve customer retention.
But being different is not an easy thing. You need to adopt new ways, bring creativity in action with your methods and products, which is a daunting task.
The best practice is to adopt an in-house research team or outsource from the third party and keep your products and services polished and refined from time to time with innovation and creativity to make it more engaging and useful.
7. Fulfill Your Promise
Making promises is setting up expectations. A promise is a debt.
If you fail to keep your promise, you break the existing trust. In addition, you incite your customer for revenge.
The best is to follow one simple rule:
Under-promise and over-deliver.
Fulfilling your customer promises increases the likelihood of their engagement and they tend to remain your customer and take your services/ products as well as refer you to their friends and family.
Therefore, avoid over-promising to your customer.
8. Keep Your Support/Customer Care Team Active
Every customer faces problems while dealing with new products/services and in such cases, all they seek is expert support.
The assistance or help offered by the company to resolve the problems encountered by its customer in using the product or services is known as customer care services.
Resolving your customer’s problems makes them happy and fulfilling, which avoids their deflection towards your competitors.
Therefore, supportive customer care service increases customer retention and avoids their churn.
Other benefits of good customer service:
- Increase the loyalty of your customers toward your company. The trust also increases.
- The customer may try your other products and hence help in increasing sales.
- Good customer service also helps in building a strong customer-company relationship.
9. Keep Your Users Experience Pleasant(Don’t Just Sell, Educate Them)
A pleasant experience is a great desire for everyone. People spend a lot of money and visit mountains, beaches, picnic, theatre, etc, all for some pleasant experience.
In the same way, when your customer visits your eStore, a dull and horrible experience may discourage them to visit next time.
On the other hand, when the shopping process of your eStore is simple and exciting, the customer will love to stay with you, buy from you, and appreciate you.
Customers spend more time and money if they have pleasant shopping experiences.
Some ways to make the customer experience pleasant are:
- Eliminate the complexity of the buying process. Keep the product/service page simple and informative and design an easy and trustworthy checkout flow.
- Don’t always sell. Care for your customers by providing them with free knowledgeable resources and some extra-features.
For example, HubSpot Academy, a great learning platform by the inbound marketing giant HubSpot that offers certified online courses on several related topics such as inbound marketing, content marketing, social media strategy, email marketing, video marketing, and many others.
Source: HubSpot Academy
This feature of HubSpot made it unique among its competitors and also they don’t just sell but educate. Thus, they have higher customer satisfaction and retention.
10. Accept Your Mistake And Apologize
Even with the most careful planning, making mistakes is inevitable.
And, recognizing your mistake and taking measures to rectify it can avoid/reduce the potential damage it can cause.
The common mistakes in eCommerce business include delay in service, delivering damaged product, untimely customer support, etc.
Even your competitors are making similar mistakes. Hence, everyone is on the same boat.
Apologizing for the mistakes you make and correcting it can help to retain your customer. It also increases the bonding, and trust factor.
Source: Stripo.email
Final Words
High customer retention has countless benefits than overly focused customer acquisition.
According to the Pareto principle — 80% of your sales come from 20% of your customers. Losing this 20 % of customers can be a great risk to your 80% revenue.
With effective customer retention strategies, you can boost revenue, conserve your business resources, build a strong commercial relationship with your customers, and take your business towards branding, all in most cost-effective ways.
Once again, the final reminder — customer satisfaction is the key to customer retention.