One of the key differences between successful companies and struggling ones is the ability to retain customers. According to Marketing Metrics, you have a 60 to 70 percent success rate of selling to an existing customer, which is a far cry from up to 20 percent success rate in selling to new customers. Yet, many ecommerce business entities make the mistake of spending all their time and effort in acquiring new customers.
Before delving into the ecommerce retention strategies, consider the customer retention importance for your company and why it is something you should prioritise.
What is Customer Retention?
Customer retention is defined as the ability to retain customers over a set period of time. High customer retention rate means more sales from repeat customers.
A common mistake that many companies make is thinking that having a good product or service is enough to keep their customers for the long run. While it can happen for some brands, no company should solely bank on this, especially where ecommerce is concerned.
In a highly competitive market like ecommerce Hong Kong, multiple sites compete for a set number of internet users, which is why customer retention is crucial. According to an article from Frederick F. Reichheld and Phil Schefter from Harvard Business School, increasing customer retention rates by a mere 5% can boost profits up to a staggering 95%.
Benefits of Customer Retention in E-Commerce
Customer retention is cheaper than customer acquisition, and there is plenty of research that backs this finding. Such example is from another Harvard Business School research that states as little as 2% increase in ecommerce retention can decrease cost by as much as 10%.
Existing customers tend to spend more
Unless they have had bad experience, existing customers are likely to be repeating customers. This is because they have tried and tested your product or service, which has instilled a certain sense of confidence in them. One of the customer retention benefit you cannot afford to overlook is that repeating customers are the ones that trust you to purchase new, improved, or value-adding products and services you bring to the market.
They can help you spread the word around
Loyalty results in not just better returns but also word-of-mouth marketing for your ecommerce business. A research from ecommerce marketing platform, Yotpo, shows that 60 percent of customers will tell their family or friends about the brand they are loyal to.
You can stand out from the crowd
A study from Deloitte and Touch revealed that companies that puts a priority on pleasant customer experiences generate up to 60 percent higher profit than their competitors. Keeping customers happy and having the results to show for it distinguishes you from other brands and keeps your customers around longer.
Strategies to Retain E-Commerce Customers
With the list of benefits, the next comes the insights on how to improve customer retention. Below is a list of customer retention strategies that you can implement for your ecommerce business.
1. Implement a loyalty programme
One approach to keep your customers is to implement a loyalty programme. It could start from simple coupon or discount codes and transition to methods like a point system that automatically rewards point for accumulation for a purchase or action they carry out. They can then use those acquired points to make purchases in the future.
You can also go with more sophisticated methods like building an app to create a loyalty programme that is much more engaging through interactivity.
2. Keep up with your email list
Pair your company updates or loyalty programme with email marketing. In our previous article, we have discussed the efficacy of email marketing and how it prevails as a marketing tool to reach consumers. Continue to nurture your relationship with your existing customers via email. Send them newsletters about your new products, helpful tips, and information that concerns your products and/or services, or alert them on upcoming sales and promotions.
Make sure you develop messages that reflect your brand’s image, and try to personalise the emails to a level that connects with the receiver.
3. Make sure you have the best customer service
In the world of ecommerce, if your customers want answers, they will want it fast. You will want to make sure your customer support is always up and running, knowledgeable, and friendly, and be available pre- and post-sales to resolve any enquiry.
4. Keep your promises
Another way to spring for customer retention is to deliver what you promised. You may try to under-promise, but you should not set the expectations too low or risk affecting your brand image. Always meet your customers’ expectations or strive to exceed it – to illustrate this, a 3-day delivery that is shortened to 2 can go a long way in building service trust.