A Simple Guide To Customer Retention: 4 Strategies For eCommerce Merchants in 2021

Everyone loves getting a new customer.

But savvy merchants know that the real fun is in keeping customers coming back for more.

Seriously, one study from Bain found that a mere 5% increase in customer retention produced a whopping 25% increase in profit.

And in 2021, with acquisition costs going through the roof, customer retention might just be the best growth strategy you have.

So, let’s jump in and discover:

  • What customer retention is
  • Why customer retention matters
  • How to measure customer retention
  • 4 Ways to get started with retention today

Sounds good? Let’s go!

What Does Customer Retention Mean?

In a nutshell, customer retention is about hanging onto your customers.

It’s about you giving them more value, so they keep giving you more revenue in return. Essentially, the goal of customer retention is to turn one-time buyers into lifelong customers.

Whereas acquisition creates customers, retention maximizes the value of each one. And that’s precisely why it’s so important.

Make sense? Let’s keep going.

Why Does Customer Retention Matter?

Focusing on your existing customers mightn’t be as exciting as coming up with new acquisition strategies.

In fact, most brands are so focused on acquiring new customers that they entirely overlook their existing ones. But customer retention packs muscle when it comes to your bottom line.

For example:

  • It’s up to 350% easier to sell to existing customers than new prospects 
  • A strong retention strategy lowers acquisition costs via word-of-mouth.
  • Happy customers spend up to 260% more revenue than moderately satisfied customers.

I mean, come on. Not only does focusing on your existing customers make you more profit, but it also can drive new customer acquisition as word about your brand spreads?

Seems like a no-brainer.

So, if you’ve been neglecting your current crop of customers, it’s time to change. 

How to Measure eCommerce Customer Retention?

Measuring retention shouldn't be rocket science. The metric you need to track is your ‘repeat customer rate.’

Essentially, this is calculated by dividing the number of repeat customers by the total unique customers you have.

If you use Shopify, the platform automatically calculates this metric for you.

Simply head to your Shopify analytics page and look for this metric:

Source: Shopify

A score of 100% means every customer has purchased more than one, while a score of 0% means all of your customers are first-time shoppers.

Tracking this metric over time is key to figuring out what retention strategies work best for your brand.

Ok with that under our belts, let’s talk tactics.

4 Easy Customer Retention Strategies to Try

There’s a multitude of retention strategies out there.

But here are four of the easiest (and best) customer retention strategies to implement today:

1. Create a Loyalty Programme

There are lots of places I can grab lunch near where I work. But over the last six weeks, I’ve spent north of $150 in one specific burrito bar. Why? No, it’s not that their burritos are outstanding. 

It’s because every time you buy seven burritos, you get your eighth for free. See, everyone loves a great deal — your customers are no different! 

And if you create a program that rewards them for shopping with you (like a free lunch), they’re much more likely to keep coming back.

Few eCommerce companies do this as well as make-up brand Sephora:

Sephora’s beauty insider program offers loyal customers benefits like express shipping, dedicated support, cash savings, and more.

Notice how they have three tiers (Insider, VIB, and Rouge) which encourages customers to keep spending to reach the next membership level.

There’s plenty of apps you can use to create a similar loyalty program for your store. Probably the best known is Smile.io, which is super easy to use and allows you to get started for free.

Pro Tip: Research shows that around 75% of what drives customer loyalty are ‘emotional perks.’ Look for ways to incorporate emotional-based rewards (e.g., birthday gifts) alongside cash discounts for best results.

2. Set-up Post-purchase Offers

80% of customers say they feel encouraged to return to a brand if they are offered a discount or offer. And that just makes sense: when you’re happy with your purchase, and the right discount arrives, buying again is hard to resist.

You can send a post-purchase offer via several channels such as:

Each channel has its merits and limitations, but the two easiest to start with are email and your thank you page.

From an email perspective, a simple customer appreciation email paired with a discount can be all you need to drive repeat sales. Here’s a great example from GAP:

Now, the thank you page sounds like a funny suggestion, but in reality, it’s an awesome place to kick off your retention efforts.

For example, your thank you page is:

  • Your first chance to make an impression on new customers
  • Seen by pretty much everyone who buys from you
  • Is viewed on average 2.2 times by customers

In other words, it’s the perfect place to offer post-purchase upsells, display a welcome video, and collect additional customer information (and use that to personalize future offers).

To illustrate, check out how Amazon optimize their thank you page with related product suggestions:

You can do the same customization on your Shopify store using an app we built called ReConvert.

ReConvert is designed to help you upgrade your thank you page, make more profit and start your retention efforts with a bang (plus, it comes with a 30-day free trial!)

3. Build a Digital Community 

Here’s a simple strategy that delivers big results: start a Facebook group. (a subreddit could work well, too!).

Seriously, building a community around your products is a fantastic way to keep customers engaged. Once a shopper becomes a customer, invite them to join your community (Psst… you can do this on your thank-you page!).

For example, check out this 3 million strong Facebook group created by Instant Pot:

The group sees over 10,000 posts per month. It’s a space where customers can share recipes, tips, and tricks to help everyone get the most from the product.

Plus, customers can also get help directly from the Instant Pot support team, who are active in the community too.

So, hop over to Facebook, set up your group, and start driving your customers to it. 

Encourage members to contribute, and over time, you’ll enjoy the benefits of a more engaged customer base and the profits that come with it.

4. Deliver Top-tier Support

Think about the last time you received fantastic service. I’m willing to bet that you feel some connection to the company that provided.

At the very least, you’d be prepared to shop with them again, right? Well, that’s precisely why you need to prioritize delivering excellent customer service.

The data bears this out too - 67% of consumers say that the one reason making them come back is a good customer experience.

There’s lots that goes into building an excellent customer service strategy, but the basics are:

  • Make it easy for customers to reach you: Email marketing support alone isn’t enough. Be available on whatever platforms (Instagram, live chat,SMS) they prefer to use.  

For example in conversational text messaging, using local dedicated 10DLC numbers gives shoppers an additional channel to text their favorite brands. Your customers will appreciate having a single point of contact to to contact you if they ever need instant support on restock updates, shipping information, technical help and more.

  • Stay consistent across all channels: Use a helpdesk to pull all your customer interactions into one place so you can keep the conversation (and the relationship) going.
  • Don’t lose your human touch: Support tech like chatbots are great, but consumers still crave empathy and human interaction. If you’re too busy, hiring a virtual assistant can be a good shout.
  • Go the extra mile: Handwritten notes, social media shout-outs, free swag, birthday wishes, and so on are what turn regular customers into superfans.

If you’re ever in need of some eCommerce support inspo, just hop over to renowned customer-pleaser Zappo’s Twitter page. There you can feast your eyes on feedback like this:

Go Forth & Retain More Customers

If you’re looking to maximize the revenue of every customer you work hard to acquire, then hanging onto customers is an absolute must.

Thankfully, creating a retention strategy that keeps customers coming back isn’t very hard. 

You can start by:

  • Creating a loyalty program
  • Setting up automated post-purchase offers
  • Customizing your thank you page to make a killer first impression
  • Building a digital community around your brand
  • Delivering stand-out support that makes customers smile

Once you’re doing all these things, you can bet your bottom dollar that customers will be delighted to shop with you again. And again. And again!

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