Customer retention is more valuable than customer acquisition.
How much more valuable? Well, that depends who you ask.
Some people say it costs five times as much to earn a new customer than to retain an existing one. Others say that customer retention is seven times more valuable. And finally: “Acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one.”
Okay, so the exact numbers are a little fuzzy. The point, though, is that customer retention is cheaper, more valuable, and in lots of ways easier than customer acquisition.
This post will walk through all things customer retention. We’ll cover:
- What is customer retention?
- What are some proven customer retention strategies?
- What are the best apps to help automate customer retention?
What is Customer Retention?
Customer retention is the process of turning one-time buyers into repeat customers. The goals and methods vary by industry: A company that sells high-end software will have different customer retention strategies than your ecommerce store. But for all sectors, the idea is to provide a level of quality and service that keeps people coming back.
Retention comes from retain, and retain is basically just a fancy way of saying keep. So the whole idea behind customer retention is to keep your customers.
A big chunk of the content out there about customer retention might not be relevant for ecommerce store owners. For example, HubSpot is not speaking to ecommerce warriors when they write, “A significant portion of the sales process should be focused on determining if your company and the prospect are the right fit — from both a relationship standpoint, and how you will work together.”
Do you vet people when they get to your checkout page to see if they’re a good fit? Didn’t think so. (And we don’t recommend starting.)
Tips like this illustrate how varied customer retention is across different sectors. Lots of companies will have a customer success team that gets evaluated on customer retention. Chances are you don’t have a customer success team, which means your customer retention strategies will have to be a bit scrappier.
But hey, that’s no problem. Let’s dive into some of the customer retention strategies that are designed for ecommerce store owners like you. Strategies that will give your customers the incentive, opportunity, and desire to come back to your store for another purchase.
1. Set Realistic Expectations
Setting realistic expectations can have a huge impact on customer retention.
Think about shipping times, for example. Most online stores can’t compete with Amazon when it comes to shipping times. But we can at least keep customers informed.
Suppose you have a customer who orders something and then has to wait a few weeks for it to show up. This can go one of two ways:
- They have no idea how long shipping will take, and they are more annoyed every day when their package doesn’t arrive.
- They knew from the beginning that it would take a little while, so the two-week wait is no problem at all.
From a customer retention standpoint, we want to create this second scenario. And there are lots of ways to do it. You can have detailed, transparent information about shipping on your website. You can send emails to customers telling them that their order was received; that their order was processed; and that their item has shipped.
You can customize the updates you send to your customers with a few clicks in the Shopify backend:
Of course, setting expectations goes way beyond shipping. Make sure your product descriptions are accurate. Make sure there aren’t surprise fees that appear at checkout. Setting clear expectations is a basic, but huge, step toward customer retention.
2. Create a Loyalty Program
A customer loyalty program is a great way to increase customer retention. These programs reward your customers by giving them incentives to come back and shop with you.
Once your customers opt in to your loyalty program, make them feel special by hooking them up with offers: Give them a sneak peak at new products, and offer exclusive deals. This royal treatment will help your customer retention efforts.
You can even give someone loyalty program-esque benefits before they have opted in. For example, you can offer each buyer a discount code inside of their order confirmation email. Don’t make them sign up for anything – just get them the discount straightaway.
The Shopify backend lets you tailor your order confirmation emails and create discount codes to bolster customer retention.
3. Pay Attention to Questions
You know how you sometimes need an extra set of eyes to edit because it’s impossible to spot your own typos? The same thing can happen with your store: You designed the customer journey, you built the product pages, you set the prices. In short, you understand everything about your store because you invented it.
Which is exactly why we can’t always see what we did wrong. At least not as well as our customers can.
Paying attention to questions about your store is a great way to boost customer retention. If someone asks a question that you thought was obvious, that’s your clue it’s not obvious. Or if they ask a question that you already explained, then maybe you didn’t explain it clearly enough or loudly enough.
Everyone whose store is not called Amazon needs to work extra hard to make customers feel comfortable. The more comfortable they feel, the higher your customer retention will be. So listen to those questions and remember that if one person is asking it, others might be as well.
4. Pay Attention to Complaints
Customer retention depends on customer satisfaction. Every complaint you receive is like a mini customer satisfaction survey. So when you get a complaint, don’t ignore it.
You could even take steps to make it simpler for customers to submit complaints. Put a Contact page on your website, throw your email into the footer, be available on social media.
Complaints are not a good sign for customer retention – unless you use them to make the next customer’s experience better.
5. Be Active on Social
Customer retention is impossible if your customers forget about you. And there are few better ways to stay top of mind than engaging with customers on social media.
If social is going to be part of your customer retention strategy – and it should be! – then bake it into the customer journey. Put social buttons in your footer, on your checkout page, on your contact page. Everywhere. There’s a reason why Shopify makes it so easy to add social media elements to your store:
When customers compliment your store on social, thank them for the kind words and then share their love with the rest of your followers.
You can also announce new products, deals, and other updates on social. That’s a great way to generate buzz around your social channels. Here, for instance, is an email from ecommerce bra shop Harper Wilde.
There are loads of apps you can use to automate and optimize your social engagement. (Check out the Apps section below for details and links.)
You can even put your social buttons in your emails. MailChimp, for one, has drag-and-drop modules that you can throw right into your email templates:
6. Target Customers on Social
Social media can help with customer retention by letting you target past buyers. With Facebook and Instagram, for instance, you can create target audiences based on pages that customers visited – like, say, a “Thank you” page after making a purchase – or on certain events.
When it comes to customer acquisition, so much of the targeting that online store owners do on Facebook is guesswork. It’s based on locations, or age groups, or interests, or gender.
But when you use social media to target past customers, it removes the guesswork. You know the people on the receiving end of these ads made purchases on your site, making social targeting a valuable tool for your customer retention strategy.
7. Use Email
Each email you send can aid customer retention — even the ones that aren’t really about customer retention. We talked earlier about how important setting expectations is for customer retention. Well, every email can be part of that process. The order confirmation, the shipment-sent confirmation, the follow-up thank you. These are great ways to set expectations and engage customers.
Once you compile an email list, you can use segmentation to increase customer retention. For example, you could create segments based on the specific products that customers purchased, how much they spent, whether they used a discount code, and so on.
It seems like email is becoming less popular, at least among certain demographics. But that’s not necessarily a bad thing for your customer retention strategy. As personal communication keeps moving to iMessage, Facebook Messenger, Snapchat, and WhatsApp, emails might become less intrusive: They won’t be competing for real estate with messages from friends and family. That means your emails will have a higher chance of helping you hit your customer retention goals.
8. Engage in Social Responsibility
Customer retention hinges on your buyers feeling good about their experience with your store and products. That includes price, quality, communication, and so on.
But you can also make customers feel good by letting them know that they are doing good. This is where social responsibility can have an impact on customer retention.
Social responsibility refers to activities that help people in need. And lots of online stores do a brilliant job of incorporating social responsibility into their business – and letting customers know about it. Examples include donating a certain percentage of every sale to a charity, or providing a meal for needy children for every purchase.
After all, when your customers know that every item they buy will help a good cause, you’re giving them an incentive that goes way beyond reliable shipping.
Social responsibility isn’t a magic bullet. But when it comes to customer retention, we want to give our customers every incentive to shop with us again. That means good prices, reliable shipping, and spot-on social media, but it can also mean a good feeling that your customers have when they click purchase. Most stores don’t give their customers that feeling, and if yours does, it will only help your customer retention.
Customers Retention Apps
Alright, not all eight of our customer retention tips can be automated with apps. There is, for example, no app for social responsibility, or for setting clear expectations.
That said, lots of the nitty-gritty work involved with customer retention can be automated. Here are some apps that could give your customer retention strategy a boost.
(Note: There are many, many more apps than these. Think of this as an automation appetizer.)
Loyalty program apps
S Loyalty lets you launch a branded loyalty program. You can choose the rewards you offer, including price discounts, free shipping, and more.
Smile.io grants loyalty points, encourages word-of-mouth marketing with a referral program, and has a rewards structure to make your most valuable customers feel special.
Retentio has lots of features to help with customer retention, including a discount coupon on the thank you page and discounts that are automatically applied to customers’ baskets.
Social media apps
Snappt specializes in shoppable Instagram galleries, letting people buy products that appear in your Instagram feed.
Postingly automatically authors posts about your products, including new products that you only recently added to your store.
Kudobuzz can aggregate and display social testimonials from your customers on Instagram, Facebook, Twitter, and more.
MailChimp is the email tool for small business, and for good reason. It has loads of integrations – including with Shopify – and lets you set up auomated emails and ad campaigns.
Spin-a-Sale is an innovative way to collect email addresses. It works by firing a game-like popup when visitors are leaving, and offers a discount if they punch in their email address. They get a discount, you get a bigger email list.
Happy Email sends automated thank you messages to new customers 30 minutes after their first purchase.
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