Updated: Nov 22
This might not be the first time you heard this: it's more cost-effective to get current customers to buy your products repeatedly than to find new customers. Turning your customers into loyal followers of your brand is the cornerstone for developing a sustainable business strategy. It is more about creating a process to facilitate quality experiences for your customers and become a trusting brand. Let’s look at how to get started with building a customer retention strategy for your e-commerce business.
What Lowers The Chances Of Repeat Purchases?
First, let’s try to understand why customers might not be coming back to your e-commerce website. Understanding the root causes will provide you with a strategic direction for developing solutions.
Customer retention strategies aim to boost repeat purchases and increase the value of each customer kept. When a customer makes repeat purchases, it shows that they are satisfied with your products and service. These customers can then attract more people to your business via positive word of mouth. Before delving into how to get them to stay with you, we must first look into what can lower the retention rates.
Problem 1: Products not meeting customers’ expectation
When a product does not match customers’ expectations, their dissatisfaction will turn them to other competitors. For instance, product imagery is a powerful tool for e-commerce stores. When the product received does not match the image shown on your website, leaving an impression that they could not get the promised value from your products, you might have meddled with the opportunity to build a trusting relationship with your customers.
Problem 2: Unrewarding policies for customers
Certain policies have become crucial to draw customers in, for instance, free return shipping. These policies are widespread among e-commerce retailers, with 49% of retailers offering free return shipping. 67% of the customers have confirmed the importance of such a practice before proceeding to purchase. If your store does not have these policies, which add to the overall customer experience, you might lose customers to your competitors.
Problem 3: Ineffective Marketing & Customer Relationship Building
Marketing and relationship building are the backbone of customer engagement. It is common for e-commerce retailers to focus on sales instead of using stored customer information, like phone numbers and email addresses, as marketing channels to boost repeat purchases.
E-commerce businesses should focus on building a meaningful and consistent relationship with customers, like informing them about news related to new collection launches, discounts, and sales.
Why Should You Focus On Customer Retention?
Affordability: It's six times cheaper to make an additional sale to an existing customer than it is to find a new one, and it's much easier
ROI: Harvard Business study showed that a 5% increase in customer retention can increase profits by 95%
Loyalty: Retained customers know they can trust your brand, and that you offer quality products. So, they buy more often and spend more than new customers.
Referral: Satisfied, loyal customers are more likely to refer products to their friends and family members. It can save a lot of your marketing budget as you don't have to spend as much on activities like brand-building.
How To Drive Customers Back To Your Business?
Email marketing offers the opportunity to build relationships with your customers before and after their purchase. According to Shopify, Email has the highest conversion rate at 4.29%.
Remember to create engaging newsletters and high-value promotions instead of spamming messages.
For instance, after a customer's initial purchase, you can send a “thank you for your purchase” email and ask if they are satisfied with the product. Appreciating customers’ purchases and requesting feedback can make them feel good about their decision to buy from you.
Establish Better Customer Relationships
An effective communication system can offer support to your customers in a timely manner and can enable you to establish a better customer relationship prior to and after the purchase. Having a live chat tool such as a chatbot may help to turn a question into a sale or to offer a solution for a complaint. An effectively solved problem can turn an upset customer into a repeat customer as it builds their trust in your brand.
Reciprocity is a social construct that has been found to increase loyalty. Acts of kindness create a feeling of obligation in the person who instinctively wants to repay the kindness. Creating loyalty programs is an effective way to motivate customers to purchase more in order to earn valuable rewards.
There are two types of reciprocity:
Surprise reciprocity: You can send offers through app notifications, email and SMS to offer discounts for customers that haven’t purchased in a while.
Trumpeted reciprocity: You can offer a discount after customers have fulfilled certain actions. For instance, offering discounts for first-time buyers for their next purchase.
So, to close off...
In summary, remember that customers are your primary growth assets — more valuable than any tools or services. A keen focus on improving customer experience and establishing long-term relationships is a powerful way to pump up your revenues.