How to Improve Ecommerce Customer Retention (5 Easy Ways)

How to Improve Ecommerce Customer Retention (5 Easy Ways)

In this comprehensive guide to ecommerce customer retention, we'll explore how exceptional customer service can act as the heart of customer retention, why email marketing and remarketing should be your trusted allies, and how social media engagement and community building can encourage loyal brand advocates.

What is ecommerce customer retention?

Ecommerce customer retention is a set of strategies and tactics used to keep your existing customers coming back to your online store. Think of it as a virtual "welcome back" sign that encourages a second, third, or hundredth visit.

It’s also a proven formula for business growth. Research finds that increasing customer retention by just 5% can increase profits from 25% to 95%.

Of course, there are several factors that can influence customer retention in your ecommerce business. Service quality, for instance, can significantly affect customer retention. Quick responses and reliable support are quiet heroes in this journey, often making the difference between a casual visitor and a committed customer.

Price and value proposition also play a decisive role. Even your most loyal customers are likely to shop around. If your offers don't match the value they're seeking — whether it be quality, service, or the overall shopping experience — customers might decide to go somewhere else.

The user experience on your website is another factor. A complex checkout process or a site that’s difficult to navigate can deter customers. On the flip side, a smooth and enjoyable user experience can cement customer loyalty.

What is a good customer retention rate for ecommerce?

Customer retention rates can significantly vary across different industries, but understanding these norms is an essential step towards setting realistic targets for your ecommerce business.

Based on industry reports, the average ecommerce customer retention rate is 31% to 38%. But remember, this is just an average. Depending on the nature of your products, your business model, and your target market, a “good” customer retention rate can range anywhere from 20% up to 60% or more.

For instance, in industries where repeat purchases are more common, such as groceries or personal care products, a good retention rate may be higher. On the other hand, in high-ticket or specialty sectors where purchases are less frequent, like luxury fashion or electronics, a lower retention rate could still be considered healthy.

These numbers serve as a general guide rather than a one-size-fits-all rule. Your “good” may look different from another company's, and that's completely normal.

The key to ensuring growth is to establish a benchmark that makes sense for your unique business, then work towards strengthening your ecommerce customer retention strategies to improve this rate over time. As long as your customer retention rate is steadily improving, and you’re making a continuous commitment to enhancing customer satisfaction and loyalty, you’re in good shape.

Key metrics that help measure the pulse of customer retention rate

When evaluating your customer retention rate, it’s important to know what you’re looking for. Here are some of the essential ecommerce retention metrics to track:

  • Customer Retention Rate (CRR): This shows the number of customers who stick around over a particular period compared to the starting number.

  • Purchase frequency: This reflects how often customers are coming back to make additional purchases.

  • Average Order Value (AOV): While not a direct retention metric, AOV indicates the average dollar amount spent each time a customer places an order, giving valuable insight into customer behavior and loyalty.

  • Customer Lifetime Value (CLTV): Ecommerce LTV quantifies the total revenue that a business can reasonably expect from a single customer account.

These metrics offer unique insights into the health of your ecommerce business, enabling you to take the pulse of your customer retention, understand what's working, address what's not, and uncover opportunities for growth.

5 ecommerce customer retention strategies to implement now

Now that you have an understanding of what customer retention is and why it’s important for your ecommerce business, let’s discuss 5 highly effective strategies for improving it.

1.  Personalize customer experiences

Personalization in ecommerce is about catering to your customers' specific needs and wants, seeing them as unique individuals rather than just another transaction. According to Trust Pilot, offering personalized customer experiences can improve online conversion rates by roughly 8%. When it comes to customer retention strategies, personalization enables you to create thoughtful experiences and genuine relationships that bring customers back to your ecommerce store again and again.

Leveraging customer data is the best way to provide personalized customer experiences. When you consider every virtual interaction, every click, every scroll, every transaction, your company possesses a lot of valuable information about your customers. From behavioral data like past purchases and browsing history to demographic data like location and age, these insights contribute to tailoring a unique ecommerce journey.

By harnessing this data, you can make your customers feel recognized and valued as well as offer personalized product recommendations and timely suggestions that align with their personal tastes, making them more likely to revisit your online store.

2.  Reward loyalty with special programs and incentives

Imagine walking into your favorite local coffee shop. The barista, recognizing you, greets you by name and remembers your preferred drink. Plus, after several visits, you earn a free coffee. It's a small perk, but it makes you feel valued and motivates you to keep coming back. This is what a well-structured loyalty program aims to emulate in the digital world of ecommerce.

Ecommerce loyalty programs can be powerful tools for retention, transforming single purchases into sustained relationships and turning one-time customers into faithful regulars.

These programs come in many shapes and sizes. Here are just a few types to consider:

  • Points programs: Customers earn points for every purchase, which they can eventually redeem for rewards. It’s an equivalent of your coffee shop punch card, made digital!

  • Tier programs: Customers level up via a tiered system, unlocking increasingly attractive rewards. It sparks a sense of achievement and keeps customers engaged in the long-term.

  • Partner programs: Tie up with related businesses to offer broader rewards that customers would appreciate. This strategy can also open your business up to potential new customers.

  • Value-based programs: These programs reward customers who align with your brand's values. For instance, you could reward customers who make environmentally-friendly choices.

The key is to tailor your incentives to your customers' preferences. Everyone loves free stuff, but what they love more is feeling valued. A well-designed loyalty program can show your appreciation in a way that truly resonates.

3.  Deliver exceptional customer service

Customer support is an extension of your brand, a representation of your commitment to customer satisfaction. A quick and empathetic response to a customer concern can turn a potentially negative experience into a reaffirming one that enhances loyalty.

Delivering outstanding customer support is no small feat, requiring a perfect blend of competent personnel and efficient technological platforms. This is where customer communication tools like Help Scout come into play, offering features dedicated to facilitating exceptional customer care.

Here are a few features to look for when considering a customer service platform to promote customer retention:

  • Shared inbox: Using a shared inbox for customer support enables your team to collaborate effectively, leading to increased productivity and shorter response times while fostering stronger relationships with customers.

  • Knowledge base: A knowledge base is a self-help tool that allows for quick and easy access to information by customers and internal teams alike. This can reduce the need for support inquiries and promote collaboration and efficiency among team members.

  • Live chat: Using live chat software for customer support can enhance real-time interaction and problem-solving for customers, leading to more satisfying service experiences and enabling your team to meet customer expectations more effectively.

  • Customer management: Effective customer management provides a streamlined view of customer data, conversations, and activity, improving personalization and enabling you to respond to individual customer needs quickly and accurately.

  • Customer engagement: Beacon, Help Scout's web widget provides a versatile customer support experience by suggesting relevant help content and offering live chat without forcing visitors to leave your site.  It can also be used for targeted in-app messaging and collecting customer feedback. This immediate and personalized messaging helps customers to remain engaged and boosts customer satisfaction.

4.  Leverage email marketing and remarketing

Email marketing offers several ways to engage and retain customers. Birthday wishes or milestone promotions, order confirmations, newsletters featuring insightful content not only keep your business top of mind, but also add value and build a bond with your customers.

Successful email marketing is all about personalization, or delivering the right message to the right person at the right time. In an inbox cluttered with promotional messages, what stands out is relevance and sincerity. Automated email platforms can help categorize your customers based on their purchase behavior, preferences, and history. Once you understand their habits and likes, you can tailor your communications to make them feel valued and understood.

Remarketing, on the other hand, is a clever way to reconnect with customers who have interacted with your website but not made a purchase. Essentially, you help jog their memory about the items they viewed and liked. Using cookies or pixel tags, you can track these items and later display ads for these same products on different websites your customers visit, creating a reminder about the item they liked.

The real magic of remarketing lies in its ability to narrow down the audience to only those who have shown interest in your offer so you’re not just shouting in a crowded marketplace, but are instead having a one-on-one conversation.

The road to building loyal customers is paved with understanding their needs and consistently providing value, and both email marketing and remarketing are effective instruments to achieve that. By using these strategies thoughtfully, you aren't just selling products in the traditional sense, you're creating a relationship and experience that drives loyalty and long-term growth.

5.  Boost social media engagement and community building

Social media is similar to a bustling market square, where your customers congregate to chat, share their experiences, and discover new things. This digital landscape is made up of sites like Facebook, Twitter (X), Instagram, and LinkedIn, and can become a powerful tool for retaining customers if leveraged effectively.

One of the primary benefits of social media is the opportunity for constant engagement. Through timely and relevant posts, you can keep your brand at the forefront of your customers' minds. Providing value is paramount here, so be sure to share practical tips, industry insights, or even light-hearted content that can resonate with your audience. This process of frequent, value-adding touchpoints helps both with customer retention and with building a positive brand personality.

Social media should be a two-way communication where you not only broadcast out to your followers but listen to them and engage in effort to build community. Alongside your regular content, prompt and empathetic responses to comments, messages, or reviews can reaffirm your commitment to customer satisfaction. A quick reply to a query or a sincere thank you to a positive review goes a long way in fostering customer loyalty. Plus, being responsive and transparent, especially during a crisis or customer complaint, increases trust in your brand.

Encourage discussions by asking questions, seeking opinions, or hosting Q&A sessions to foster an environment where your customers feel valued and listened to. Genuine interactions from your side can make customers feel part of a larger family, which is a feeling that often translates to increased brand loyalty and customer retention.

Improve your ecommerce customer retention

Retaining customers in ecommerce might feel like taming a wild horse at times. With today's competitive landscape and increasingly discerning customers, it's no easy task. However, as we've seen, there are strategies and tools you can adopt to help turn this challenging target into achievable goals.

Any strategy has its own unique strengths and capabilities and every business is different, so what works for one might not work for the other. It’s also important to keep in mind that customer retention is an ongoing commitment, not a one-time effort. Be prepared to do some testing as you find the perfect mix that suits your business and your customers. Remember, it’s not about the destination, it’s about the journey.

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Jacinda Santora
Jacinda Santora

Jacinda Santora combines marketing psychology, strategy development, and strategy execution to deliver customer-centric, data-driven solutions for brand growth. Connect with her on LinkedIn.