As you build your e-commerce brand, your initial focus should be customer acquisition.
However, many online retailers continue to spend most of their time and energy attracting new shoppers and neglect customer retention as their business grows.
But building a loyal customer base is essential to creating a successful e-commerce company.
In addition to savings on customer acquisition costs, repeat buyers are more likely to make larger purchases and act as informal brand ambassadors, recommending your company to others.
While still-cited research on customer retention in the industry dates back to the 1990s—long before the advent of online shopping—the study by researchers from Bain and Harvard found that 5% The increase in the retention rate increased profits from 25% to 95%.
If the right scale for e-commerce is half that, customer retention is well worth the investment of your time and money.
Dozens of strategies, from minor tweaks to major initiatives, can improve your retention rate.
Here are 12 you can apply to improve customer retention in 2023.
6 marketing strategies for customer retention in 2023
The marketing team can play an important role in customer retention and acquisition. In fact, targeted marketing to past and present customers is one of the most effective things you can do to increase sales.
These six (mostly) low-cost, high-impact strategies could yield positive returns in 2023.
Leverage data to understand your customers and customize your marketing
The advantage of e-commerce over traditional retail is the wealth of data at your disposal.
However, all this information will only benefit you if you invest in the tools you need to analyze it.
Customer Relationship Management (CRM) platform like Salesforce Commerce Cloud or Zoho Business Offers tools to enhance customer retention.
Leverage the data you have about your customers to deliver relevant messages that will drive repeat sales.
This inside knowledge gives you a huge advantage over the competition, so make the most of that advantage.
Reward clients for referrals
Referral from a friend is an excellent way to attract new customers.
If you are doing everything right, your customers are talking about your business for free because they love your products or services, and they want everyone to know about it.
However, you can boost your referral pipeline with incentives or rewards for referrals that lead to new business. There are plenty of tools to help you do this, such as Referral candyAnd AmbassadorAnd Referral rockFor example, but not limited.
The referral coupon also gives you data points to understand which customers give your business the most important boost.
Offer strategic coupons
Time coupons and discount codes to improve customer retention.
For example, a coupon after a first purchase stimulates a second purchase, making the customer a repeat buyer.
Run some A/B testing to determine the optimal discount amounts and timing for different customer profiles, then automate a program to offer them to your customers.
Show you care about customer service
Personal and human customer service is expensive, but it can pay big dividends.
A positive solution to a customer problem encourages customer retention while feeling ignored or (worse) mistreated can lead to angry posts or reviews.
Interact with customers across all channels
Interact with consumers on social media.
Make employees available to provide personalized responses to customer service inquiries, questions, and other comments on social channels.
An emotional connection and a sense of being heard will increase customer retention.
Email, email, email
Email might sound pretty old school in the age of Slack, WhatsApp, TikTok, and the ever-growing social channels, but here are the key facts:
- There was more than 4.1 billion Email users globally in 2021, more than half of the world’s population. in the United States, 91.8% Internet users have e-mail.
- Most or all of our e-commerce customers have email accounts.
- They read or at least check their emails. Mailchimp data for 2022 showed an average 18.39% Retail email open rate. Even if a customer doesn’t open an email, you’ve put your brand name and message in front of them, and they’ll remember you when they next need to make a purchase in your product domain.
Email is a low-cost and great tool for high-frequency communication, especially with your best customers.
A/B test messages and iterate to design effective email campaigns for different customer profiles, then automate with software such as Mailchimp, HubSpot, or Salesforce.
6 customer experiences that improve customer retention
Customer experience is at the heart of customer retention, and your fulfillment processes play the most direct role in that online retail experience.
Work with your logistics team or freight company on these 6 fulfillment upgrades for 2023.
Provide fast delivery
When a customer places an order, they want it to go to the top of the list for picking, packing in the warehouse, and shipping quickly to get to their door in a matter of days (or even hours!).
Of course the reality is different. Orders are queued for fulfillment and shipped in the order in which they are placed.
Delivery time depends on the distance from the warehouse to the customer’s address and external factors that contribute to delivery delays.
Here’s what you (or the appropriate third-party logistics provider) can do to get orders delivered quickly and boost customer retention:
- Shortened warehouse queue. If it takes eight days to arrive, the customer doesn’t know (or care) how many days they’ve been waiting for the pickup at the fulfillment center and how long they’ve been on the truck. When you ship orders the same day the customer places them (or the next day at the latest), you shorten the delivery time and keep your customers happy.
- Choose your warehouse locations carefully. A warehouse in Long Beach or Miami may be convenient for your port of entry for your goods or your company’s headquarters, but orders to the other side of the United States will take several days to ship. Choose central warehouse locations that offer ground delivery in two days or less to a wide area. With convenient locations, you can provide fast delivery to most parts of the continental United States with only two or three warehouses.
- Diversify the way you deliver. FedEx, UPS, and USPS are the main US carriers, but have lagged behind during peak times in recent years due to capacity constraints. Don’t get locked into one carrier, so you have options if your favorite delivery company runs out of space during the holidays. Take DHL, for example, which is expanding its domestic services in the US, as well as regional delivery companies.
Focus on the accuracy of the request
E-commerce thrives on reliability, so your orders should be picked and packaged flawlessly almost 100% of the time.
Mistakes will happen, and your customers will forgive you for them (see customer service above), but they should be extremely rare.
Create a report card for your completions and if your error rate is above 0.5%, level up in 2023.
Delivering an exhilarating Unboxing experience
Find ways to make the unpacking process more memorable.
This can be anything from attractive branded packaging to inserts with graphics and text that convey your brand’s personality to coupons offering discounts on future purchases or other special perks.
Plus, it’s consumer-made unboxing videos A great way to increase awareness of your e-commerce company.
Go green with your loyalty
Consumers want to feel good about what they buy, and in 2023, that means helping them feel better about the carbon footprint of their purchase.
Whether or not your brand has sustainability as a core value, green packaging will make an impact.
If the shipment results in a large pile of rubbish (for example, plastic bags, styrofoam inserts, or stuffing), this is the opposite of a pleasant unloading experience.
Use recyclable or compostable packaging and fill where possible, highlighting your brand’s green initiatives in marketing and packaging.
Inventory, inventory, inventory
It’s hard to overemphasize the importance of inventory management for reasons that go far beyond customer retention.
But managing your inventory well affects the consumer experience, as well as your supply chain and profitability.
For example, if you don’t reorder a popular item in time and it runs out of stock, shoppers may get the same or similar item from one of your competitors. If they like the competitor’s product, you’ve lost a customer.
You may be able to keep customers in the fold with late orders, but if you do, you’ll often communicate while the customer waits so they know their order is coming.
Even the best-managed supply chains sometimes suffer from glitches in today’s world. However, smart, data-driven inventory management can protect your inventory from shocks and help maintain your loyal customer base.
Build loyalty with seamless returns
Returns are a critical component of your logistics that can make or break your relationship with a customer.
Use reverse logistics to increase customer retention through the following best practices:
- Pay for return shipping. This gives online shoppers the confidence to make a purchase, and they won’t resent you if they need to return it.
- Make returns easy. Offer an online returns portal to print a label or include a returns shipping label in the box. Include clear language and graphics to make the process clear to your customers, and to make this information easy to find on your website.
- Give your customers multiple return options. Allow returns of online purchases in-store (if you have a physical location) or provide a convenient location for delivery.
How to calculate customer lifetime value
Customer acquisition metrics are much more interesting and easier to understand than customer retention numbers.
Conversions, customers gained and lost, and average sale are all valuable data points.
But slow growth slows your company’s growth, and customer retention speeds up its growth.
You can do a simple CLV calculation using this formula:
Customer Lifetime Value = Average Gross Order Amount x Average Orders Per Year x Average Years Retention (companywide)
These values will change over time as you add more data, particularly the average customer retention time for your brand.
You can improve the calculation to calculate profitability by replacing the average total order amount with the average profit margin per order.
This allows you to separate repeat deal seekers from high-end customers willing to pay full price.
conclusion
While customer acquisition should always be a focal point for your business, remember not to forget customer retention.
By ensuring that you’re providing an enjoyable experience for your existing customers, you’re laying the foundation for a loyal customer base that will keep coming back—and you’ll spread the word of your brand through word of mouth, too.
Whether you follow these strategies or others, level up your customer retention practices in 2023 to increase your revenue and profits.
More resources:
- How to use content marketing for customer retention and loyalty
- 7 tips for social trading and doing it right
- Ecommerce Marketing: The Ultimate Guide
Featured image: garagestock / Shutterstock
