6 Ways to Increase Customer Retention

When focusing on growing a business, gaining new customers is the goal. But, what about the customers you already have? Creating a strong customer retention strategy to encourage repeat purchases is key to ensuring continued growth for your e-commerce business.

Why is customer retention important? 

One of the biggest draws to creating repeat customers is that they are much less expensive than new customers. Since you don’t have to spend as much on retention marketing to get a sale, you’re saving money overall. Customer retention contributes to a higher return on investment for businesses. Studies show a 5% increase in customer retention can create more than a 25% increase in profit. Additionally, having repeat customers is a sign of value within your brand that will transfer to future customers. 

6 steps to better retention of customers

Creating an effective customer retention strategy will help you continue to grow. Here are 6 ways to find the right strategy to fit your business.

Seamless ordering

One of the best ways to increase customer retention is by giving people a seamless experience on your e-commerce site. It should be easy for customers to navigate your website, browse products, and order. A great way to start going about creating a seamless experience would be to perform UI and UX audits of your site. You can check out some more of our tips on how to improve your website conversion here.

Great customer service

No one likes having a bad experience with a brand’s customer service, and for most people a bad customer service experience is enough to prevent them from returning in the future. It is impossible to prevent all problems that could arise, so ensuring you have quality customer service to help is a must. Whether it is you providing customer service assistance or a dedicated response team, everyone interacting with customers should be focused on the retention of customers. Remember, it is most likely cheaper in the long run to replace one item than to source a new customer.

Top-notch shipping

Shipping is another important piece that goes hand in hand with customer service. When choosing a shipping vendor, you want to make sure you are choosing someone fast and reliable. Everyone hates to lose a package, so make sure the company you are working with has a good strategy to resolve customer problems. Their customer service can also be a reflection on you. Additionally, choosing someone with reliable tracking and fast shipment times are a must. 

Rewarding loyalty

Creating a customer retention program that rewards customers for their loyalty can help encourage repeat purchases. This can be done easily by offering special discounts, coupons, or sales to customers that might be looking to repurchase from you. You can also build out something more intensive that has reward tiers based on how much customers spend with you. The idea is that the more customers spend on your e-commerce site, the more valuable the reward or promotion. No one knows your customers the way you do, so make sure the loyalty rewards you are offering them are valuable in their eyes.

Referral programs 

Another way to focus on customer loyalty is through a referral program where customers are rewarded for referring their friends to your business. These rewards usually come in referral codes that offer discounts for both the new and returning customers. Referral codes are a great way to boost your customer retention program because the returning customer will want to push others to make a purchase with their code. Additionally, 96% of people say that they trust word of mouth to make their purchases, so this is a great way to boost the word of mouth surrounding your business.

Creating personal relationships

Creating personal relationships supports customer service. Customers want to feel like they have a personal relationship with the brands they love. One common example is the use of birthday rewards. Some businesses send customers rewards or discounts around the time of their birthday, which encourages them to make a purchase. 

 You can also create personalized offers for customers to build your relationship with them. For example, you can offer certain discounts to a customer that has spent $500 with you. Or you could offer free shipping for customers who made two orders in a month. These types of offers will make customers feel valued by the brand. The most important part is that you make sure your customer rewards drive your business goals. For example, if your goal is to gain sales, any barriers should be removed so that the customer is able to make an easier purchase.

Measure for success 

While working on your retention marketing it is important to take note of what is working and what isn’t. To measure success, you first need to decide which metric is the most important for you and your business.

One popular way to measure success is the customer retention formula.

(Total # of Customers at the End of Period – New Customers Acquired)/Customers at the Start of Period = Customer Retention Rate

This will help you to see how much of your customer pool is becoming loyal to you during a certain time period. For smaller customer lists, semi-annual or annual tracking should be enough. If you have a larger customer pool it may be useful to compare monthly.

Another popular way to measure success is the customer churn formula.

(Number of Customers at Start of Year – Number of Customers at End of Year)/Number of Customers at Start of Year = Customer Churn

 This is a very simple way to measure customer turnover. Make sure that customers who are gained during the tracking period are not factored into this calculation. If you are seeing a churn rate greater than 5-7% then you need to evaluate what potential problems may be for your business. 

 Comparatively, the retention rate and churn rate are both important metrics to decide success. The retention rate looks at the ratio of customers that make return purchases. The churn rate shows the percentage of customers lost over time. Looking at both of these rates will help give you an overall picture of your customer retention.

Creating your customer retention strategy

Creating your customer retention strategy doesn’t need to be difficult. Start by implementing just one of the tips above and as you can, work to implement more. Through experimentation and data measurement, you will be able to find what options work best to increase your brand’s retention rates. 


The Ecommerce Business Coach - Scale your Ecommerce Brand

Ready to scale your online store? 

The E-Commerce Women In Business Mastermind –  your exclusive e-commerce coaching and e-commerce digital marketing mentorship for women looking to Grow and Scale your online store.  Click here to learn more

Yours in success,

Sarah x