3 Effective Customer Retention Strategies for eCommerce Businesses
In this week’s Surge Session, we discuss customer retention strategies for e-commerce businesses. Customer retention strategies are often more profitable and easier to execute than traffic acquisition. We cover three different strategies that you can use for your own ecommerce business. Our Director of Marketing, Joseph Hassun, is joined by Marketing Specialist, Ohad Yarel.
Why is Customer Retention so Important? What do you Need to Start a Customer Retention Strategy?
First, let’s talk about why customer retention is so important. What we’ve seen is that converting a returning customer is about 40% more likely. We know that the cost of converting a returning customer is six to seven times less expensive than trying to acquire a new customer.
At the end of the day, we know that return customers are going to increase profitability. There’s a Gartner report that states that 80% of your future revenue will come from just 20% of your return clients, so there’s a lot of value when it comes to customer retention.
So what do you need in order to even get started with a customer retention strategy?
First of all, you need to set up your systems and your software, so you can really see and have control of who your customers are. The first step would be to get a good CRM system.
A CRM system allows you to segment your customers. It allows you to see which customers haven’t placed an order in the past 60, 90 days, etc. It allows you to see which are your “VIP” customers, your top spenders. Really, what it allows you to do is it allows you to target and personalize your message to these specific customers.
1. How to Use Retargeting to Encourage Returning eCommerce Customers
Now that we have a CRM system in place and we have our customers segmented, let’s talk about some of the different strategies we can use. How can we now engage with our customers and get them to come back?
When we’re talking from an online perspective, the very first thing that you have to set up is a retargeting campaign. Now, you can set up a retargeting campaign using any platform out there, like Facebook. If you install the Facebook Pixel on your website, you can re-target to people who visited your site from Facebook and Instagram. The same goes for Google.
It is typically cheaper than other PPC programs to get new impressions on Facebook or to get traditional search or shopping ads. Not only is it typically cheaper, but it also allows you to create a personalized message to someone who is already familiar with your brand. You can create an ad that has a much stronger call to action with a very good offer. Then you can really get those people who already know your brand, who are already familiar with it, and that you have already acquired, to go back into your store.
If you install the Facebook Pixel on your site, you now have data, you can now retarget your customers and segment your customers.
You can retarget them with products related to their recent purchase, for example, because you now have that data. It’s definitely a great way to get customers to come back.
You can also segment customers/visitors into different categories like, for example, people who have viewed your products. That’s all they did, they just viewed your products. That’s one segment, and you target them with specific ads with a different offer perhaps.
Then you have people who added items to cart and made it all the way to check-out, but then decided they might want to think about it. In that day or two, you can show them the products they added to their cart and offer them a discount. You can continue targeting them with gradual discounts until they finally make that purchase.
Depending on what e-commerce platform you’re on, there are apps in the App Store that allow you to do retargeting. For example, ReCart sends out an email if a visitor abandons their cart and says: “Hey, come back and complete your purchase.”
You can also have follow-ups for existing clients who have made a purchase. For example, if you know within what timeframe a client usually makes a certain purchase, you can send them an email reminding them saying “Hey, it’s been X amount of days, you must be running out. Why don’t you come back and place another purchase?”. You can make the call to action stronger by offering them a promo code or some sort of incentive.
These are all great ways to try to bring customers/visitors back to your site.
It is very important to give existing customers a good offer, a better one than if they were a new customer. This shows that you care about them. You care about their business and you hold them to a higher standard than someone who has never purchased from them before.
When you offer significant discounts to a new client, it might backfire. It might seem desperate. It might seem like you’re cheapening your brand, and that’s not the case when we’re talking about a returning client. It shows them that you appreciate them, that you value them.
If you’re expecting loyalty, you need to give loyalty in return
2. Loyalty Programs are a Must for Customer Retention
Speaking of loyalty, leveraging loyalty programs is a very effective customer retention strategy for eCommerce companies.
Loyalty programs are one of the best ways to get return clients, and there are a lot of loyalty programs out there. There are some out-of-box solutions but if you feel you need something a little bit more custom, then you’re going to need a development company to develop some custom software for you.
If you’re on one of these e-commerce platforms, like Shopify or BigCommerce, there are out-of-the-box solutions that can greatly benefit you. They can be simple but very effective.
Other than loyalty programs and retargeting, there are also some technological solutions to retarget existing clients. Aside from having one of those apps integrated into your site that sends out an automated email, you can have a much more defined email drip campaign set up through tools like mailem.io.
You can segment your customers, implement email lists for specific segments, and set up a series of emails to go out. These emails can have different offers. So, the first email would say: “Get 5% off.” If they do not make that purchase, maybe that’s not a good enough incentive for them. Then you would automatically follow-up with an email that says: “Get 5% off plus free shipping,” If that doesn’t work, you keep going until you find that threshold and you can say “Okay, this is what my customers like.”
Drip marketing gives you the ability to not only bring back a new customer and get that repeat business but also gives you data. It gives you data that you can now implement into additional strategies moving forward.
It doesn’t even have to be offers when we’re talking about drip campaign. You can also send emails informing customers of new products you have in your store or create a newsletter, for example. You want to keep a relationship, a constant relationship, with your existing clients so they don’t forget about you and that they see that you didn’t forget about them, either.
If we’re talking specific industries that are more B2B, for example, send emails that are informational and bring value to your customers. All of those things can set your brand apart and really show that you care about your clients.
3. Offline Customer Retention Strategies for eCommerce Businesses
What we’ve seen is that customer retention heavily relies on the attention you give to your customers. That goes from online to offline.
Now, let’s talk about some of the ways that you can excite customers and have them come back from an offline experience. It is very important to note that the customer experience doesn’t end once they leave your online store. In fact, it only just begins at that point.
Everything from how you ship the product, to how you box it, to what happens when the customer gets the package, makes a difference to the customer, to their experience. You have to think of every step of the customer’s experience with your brand with your product or service. That’s where you have a chance to really go above and beyond.
For example, a lot of skincare products come with free samples. Not only does that always make a customer happier and improve their experience, but it also, as a company, allows you to target a customer with samples of products they are more likely to buy. A customer who already knows your brand and already bought a certain product can now experience other products and perhaps in their next purchase it won’t just be that initial item, it will also be that product that you sent them a sample of.
All of these things can be very important to the impression that you make on the client on their first purchase. Even something as simple as how the box looks. Sometimes you get stuff shipped in such a nice box that you end up keeping the box too.
What we’re getting at here is that when it comes to successful customer retention, you’re going to see more profitability, more revenue in the long run.
Your existing customers are your best salesman. So, if you can provide a phenomenal customer experience, from the moment that they purchase and beyond, your customers will recommend you. They will write reviews online, which is one of the key factors of getting new customers.
If you focus your attention on your customer retention strategy, it will, in turn, aid your new customer acquisition strategy. They really help one another.
If you can just increase your customer retention by 5%, you will see an increase in revenue of up to 75%. So there really is tremendous value in customer retention.
Customer retention strategies are extremely important. You need to be proactive and not reactive. Don’t wait until it’s too late. Implement a solid customer retention strategy as soon as possible, if you haven’t already.
Do you need help creating a customer retention strategy? Want to learn more about the strategies we covered in this Surge Session?
Contact us. We’re here to help.