6 ways to retain more customers than you are today
This post was last updated on November 11, 2022.
We've all tasted the struggle of getting a customer to stick around.
Day after day, you skillfully execute your eCommerce marketing strategies, continuously attracting new customers to your online store. As customers arrive, you funnel them through the buying process—and upon each successful purchase, you drop them into the proverbial “basket of buyers” for further nurturing.
Yet, despite your hard work, the total number of active customers doesn’t seem to increase anywhere near the rate you had anticipated. So, what gives?
Unfortunately, the default “basket” used for collecting those hard-earned customers is often built like a basket made of wire mesh. Many customers still slip through the holes; there simply isn’t enough structure or substance to keep your customers in your brand’s basket.
That is, not without a focus on customer retention.
By honing in on customer retention strategies, you can start to close the gaps of your “basket,” turning one-time shoppers into returning customers.
What is customer retention and why should I care?
Customer retention is a range of activities that nurtures new customers into loyal, repeat customers for your brand. It’s a vital part of building a long-lasting brand, and yet most businesses tend to rely on acquisition activities to increase revenue, while only 18% focus on retention.
When you crunch the numbers, however, re-engaging existing customers is often much more cost-effective than acquiring them. Among its many benefits, customer retention can help you to:
Increase profits – A 5% increase in customer retention yields a 25% to 29% increase in revenue, according to ThinkImpact. And for many companies, about half of their revenue is from approximately 8% of their most loyal customers.
Increase customer advocacy – Happy customers produce happy customers. An estimated 60% of consumers talk to friends and family about brands they regularly patronize, reports Yotpo, and 68% of new customers come from current customers, according to a survey by Loyalty360.
Earn recurring revenue – Repeat customers tend to spend an average of 67% more than new customers, and as much as 80% of your profits each year will come from 20% of your customers, according to various studies.
Minimize customer attrition – In short, when you focus on customer retention, you have a better gauge of customer satisfaction and loyalty. This enables you to address any potential issues before they arise, further minimizing customer attrition.
How do you calculate customer retention rate?
Your customer retention rate (CRR) is the percentage of customers your company has retained over time. You can calculate your CRR using this simple formula:
CRR = [(CE - CN) ÷ CS] * 100
…where CE is the number of customers at the end of a given period, CN is the number of new customers, and CS is the number of customers at the start of the same period.
To fully understand your CRR, it helps to clearly define what constitutes an active or existing customer. An “active” customer could mean someone who has ordered a product within the last month. Or, if you run a subscription box business, it could mean someone who’s an active subscriber.
Determine the appropriate parameters for your business and use it to assess CRR.
What is a reasonable customer retention rate?
A CRR as close to 100% as possible would be fantastic—but more realistically, you should expect a CRR of 30% or higher as an eCommerce seller, according to Omniconvert. A lower CRR may indicate poor customer satisfaction, or gaps in the sales funnel.
6 smart strategies to improve your customer retention
01. Provide exceptional customer service
Exceeding expectations and showing your customers a little warmth can profoundly impact your bottom line. A whopping 80% of customers say that the experiences created by a brand are just as important to them as their products and services, according to Salesforce.
There are a number of ways to “level up” your customer service:
Deploy conversational commerce strategies - Think: live chat, social messaging app, and SMS messaging that all aim to provide real-time support as customers are shopping.
Offer clear return and exchange policies - Customers shouldn’t have to go digging around for this information—or worse, be surprised by your policies after completing a purchase. Rather, your return policy should be easy to find on your site. (Bonus points if your policy is generous, and thereby gives customers peace of mind when purchasing from your brand.)
Give accurate delivery dates - which can only be achieved with a good system for routing orders to the right carriers, and keeping inventory in sync across all of your sales channels (like, dare we say, Wix for eCommerce).
Follow up with each purchase - Keep customers updated on the status of their orders once they’ve made a purchase. At minimum, send order confirmation emails (or texts), and emails with a tracking number once the order has been shipped out. You’d also benefit from proactively asking your customers what they thought of their recent purchases, though you’ll want to make sure to have a plan for how to follow up on any complaints.
Be proactive - Proactively reach out to customers about questions they may have about an item in their cart, or to ask for a review of your brand. If a customer hasn’t engaged with your brand lately, take the initiative to proactively re-establish a relationship.
02. Make your brand values known
Just like in any relationship, customers tend to gravitate toward brands that share their values.
“Shoppers want to get to know the brand before they make a purchase decision,” eCommerce mentor Monica Sharma-Patnekar told Wix, encouraging brands to talk openly about their causes, purpose, and values.
“Your brand purpose is highly effective at the beginning of the shopper journey, when [customers] have just discovered you and are trying to figure out if your brand is for them,” she adds. “It will support building an emotional bond with your audience.”
Kait Stephens, CEO and co-founder of Brij (a software platform that helps brands create QR code-activated digital experiences) agrees, citing sustainability as a highly sought-after value.
“Brij helps consumers trace the lifecycle of their products, which allows them to trust in what they’re buying,” Stephens says. “Brands can be rewarded for having a responsible supply chain, and consumers can hold brands accountable.”
There are easy ways to bake your brand purpose into the entire shopper journey. Papier Papate, for example, proudly shares its commitment to giving back. “We recycle, we donate, and we’re never done,” the company states on its homepage.
03. Personalize the customer experience
These days, “personalization” is as much buzzword as it is an enigma. The fact of the matter is that many merchants still have a long way to go in terms of implementing eCommerce personalization effectively. Customers are now hopping from channel to channel, and data privacy laws have made it that much harder for companies to gather data that they themselves didn’t collect.
And yet, 80% of shoppers are willing to share personal data in exchange for personalized deals or offers, reports Sailthru—validating what other experts have called a shift to customer-first data (aka zero-party data).
“Consumers like personalization. They want brands to talk to them—but only if they’ve explicitly given them permission to do so,” says Tracey Wallace, director of content strategy at Klaviyo. “Keep in mind that customers are not only giving you permission to use it, but they expect you to use it. Neglecting to use their data for personalization is often viewed as a bad customer experience.”
To that end, you’ll want to entice your customers to share their information in order to receive benefits, such as personalized product recommendations (including relevant upsells and cross-sells), special deals, and an overall better shopping experience. Offer local pickup options depending on your customer’s location, or tailor your marketing to each stage of the buying process. Plus, utilize quizzes, polls, and customer chats to further sharpen your understanding of your customers.
04. Reward loyalty
There’s a reason why so many companies offer loyalty programs. They work. However, loyalty programs come with two primary challenges:
Getting customers to enroll in them
Convincing customers to remain enrolled
One way to incentivize signups is to reward participants immediately versus holding prizes hostage until their next purchase. Rewards can come in the form of free shipping, a discount, loyalty points, and more. Whichever direction you go—make sure you choose something that your customers actually value.
Gamification can further incentivize repeat business. For example, take a page from Sephora’s book and offer different loyalty statuses based on a customer’s annual spend. Each tier can come with different perks, like free gifts, additional points, and access to exclusive promotional events.
05. Cultivate emotional connections
It’s human nature to want to feel valued and connected to a larger community. Help your customers feel that emotional connection to your brand by taking the following steps:
Be transparent, vulnerable, and real - Tell your origin story to develop a more personal connection with your followers. Share the down-and-dirty details about how you got to where you are today; don’t skip over the tough parts or minimize the big milestones. Instead, use social media, email, video, and blog posts to share your journey, inspire customers, and keep them engaged with your brand’s growth.
Celebrate wins and special days with your customers - Invite customers to celebrate milestones, special occasions, and anniversaries in tandem with your brand. For example, candle maker Coal and Canary invites its followers to celebrate staff member birthdays by offering one-day discounts on the employees' favorite candle scent. As another example, Fendi takes to TikTok to celebrate 25 years of its Baguette line.
Leverage social proof - Positive consumer opinions can build trust, plus inspire purchases among customers new and old. So, encourage shoppers to share their feedback and share their shopping experiences on social media. Go a step further and partner with influencers or micro-influencers to keep your brand top of mind.
Surprise and delight your customers - Include a “welcome” gift or thank you note with every first purchase, effectively saying “thanks for trusting us with your business.” Or, create a memorable unboxing experience and celebrate special moments in your customers’ lives (like birthdays, customer anniversaries, or hitting a certain spending threshold). Don’t underestimate the power of a simple gesture of gratitude. Take this campaign by TD Bank, as an example. Watch the profound effect that an unexpected gesture can have on each recipient.
06. Offer a subscription service
When done well, subscriptions are a win-win for everyone. They generate recurring revenue for your business while offering convenience and savings back to your customers. Not only that, but consumers that participate in a subscription service have been found to spend 2.5 times more than non-participating consumers, reports McKinsey.
There are three primary subscription models:
Curation - Involves a subscription box containing one or more items based on a particular theme, style, or customer preference
Replenishment - Offers a convenient way for consumers to replenish frequently bought products
Membership - Gives subscribers access to exclusive discounts, pricing, and other perks, similar to a loyalty program
Of course, in order to offer a subscription service, you’ll need to confirm that your operations are set up to support it. There’s a lot of behind-the-scenes logistics that need to run smoothly to ensure that you don’t accidentally run out of stock of an item, or run into shipping errors.
To that end, Wix for eCommerce includes tools for managing product subscriptions and subscription boxes with ease. It’s the engine behind MightyNest’s subscription services, which combines the convenience of a subscription box with the allure of special membership perks. Customers benefit from a two-for-one deal, receiving monthly boxes and earning free shipping, plus up to 35% off every item in MightyNest’s store.
The bottom line
It goes without saying that acquiring new leads and turning them into repeat customers takes hard work. That said, the first sale is usually the hardest. Once making a good first impression, you can enjoy an easier time re-engaging customers and earning their trust—with the help of the above customer retention strategies, of course.
Are you ready to grow your business? Get started with Wix for eCommerce today.
Marketing Writer, Wix for eCommerce
Geraldine is a marketing writer for Wix. She uses her broad experience in journalism, publishing, public relations and marketing to create compelling content and loves hearing user success stories.
Allison Lee Editor, Wix for eCommerce
Allison is the editor for the Wix eCommerce blog, with several years of experience reporting on eCommerce news, strategies, and founder stories.