In our previous blogs, we’ve discussed customer retention – what it is, why it is important, and how segmentation plays a key role in setting up retention strategies.
The rate of customer retention is below 20% in most industries. And businesses lose $1.6 trillion when customers go to competitors.
Now, it is time to take the next step — understanding different eCommerce customer retention strategies to implement for your online business.
15 Ecommerce Customer retention Strategies that every Online Business can Use
Before you go through the section below, it is important to note that there is no one-size-fits-all approach to setting up customer retention strategies for ecommerce businesses. The following are based on our observation of leading brands in the industry.
1. Begin Retention with Acquisition
Before a person becomes your customer, there’s a crucial step — their first transaction with your brand. The first touchpoint. The checkout page.
“First impression is the last impression.” This is pretty much why getting your new customers’ first monetary transaction experience right is the most critical.
To ensure you provide a good experience to your to-be-customer and they complete the checkout process, do this:
- Offer them a wide range of payment options to choose
- Mention tax compliance details clearly, based on their location/demographic details, to avoid late surprises
- Provide them live-chat support to help them through the process and drive favourable actions
- Send them an automated thank you and welcome message on channels like WhatsApp, SMS, Messenger, email and similar
Segments to which to apply this strategy: early-stage customers, location, demographic-based segments
2. Provide a Good Customer Onboarding Experience
When you acquire new customers, assume they do not know anything/much about your brand, products or services. And that’s why, as a brand, it’s your job to impart that information to them.
To do that, you need a well-designed customer onboarding program.
Irrespective of the products you sell, online shoppers often need help when it comes to making purchases.
Customers who have hiccups at the beginning of their journey with you tend to remember these experiences. For example, not having a product installation guide or a point of customer service contact for a DIY Ikea-like furniture piece.
Customer loyalty expert Ruby Newell Regener says brands require 12 good experiences to make up for one bad customer experience! That’s how much bad experiences can impact customers.
Here’s what you should do to ensure a good onboarding experience–
- Send well-timed communication with the help of multi-channel automation
- Send updates on messaging platforms such as WhatsApp, Messenger and SMS
- Provide access to self-service guides, modules, FAQs
- Automate thank you messages after all actions
- Share generic communication to offer customer service/ help
- Provide easy access to your customer support channels
Segments to which to apply a good onboarding strategy: early-stage customer segments
3. Provide Omnichannel Communication
Communication is key to customer experience. The more you stay in touch with customers, the more it helps them and you. And that’s why you need omnichannel communication — multiple communication channels. It is one of the most effective eCommerce customer retention strategies.
How does it help?
- It removes redundancies and repetitions as it documents past information
- It helps you give customers a crisp experience across channels
- Improves the speed of communication and productivity
- Provides more time to engage with customers
- A study found it can increase engagement rate by 18.96%
How can you implement Omnichannel communication for your brand? Take a look at the steps below-
- Integrate all your communication channels
- Create a consistent brand voice and message
- Use your customer data to optimise your omnichannel strategy
- Personalise omnichannel experience to different customer segments
Segments to target with omnichannel communication: all segments – early, middle, and late stages
4. Provide Relevance to Customers
Many retailers think about customer retention with a one-size-fits-all approach to communication and promotions. But studies show that customers’ loyalty depends on the brand’s relevance to their current needs.
This brings us to personalization. Brands need to personalise communication sent to customers.
Here’s how you can create personalised and relevant customer experiences:
- Create one-to-one personalised experiences throughout customer journeys
- Automate processes to provide personalization at scale
- Segment customers to provide better personalization at scale
- Offer tailored recommendations and services
- Leverage AI to understand consumer needs in real-time
Segments to target with this strategy: all segments, especially middle and late stages
5. Trigger Post-cancellation Follow ups for Reconversions
When customers initiate cancellations, most businesses consider it to end their retention efforts. But that’s not how it should be. Cancellations can be turned into opportunities to retain customers.
Moreover, some cancellations aren’t initiated by customers. They are involuntary, for example, a failure in payment due to technical reasons, etc. Retailers must take proactive actions to reverse these transactions.
This is important. Because a 5% decrease in customer defection can help brands double their profits.
Here are some steps you can take to increase reconversions:
- Find out the reason why customers want to cancel/cancelled
- Send them a real-time message to ask them why they cancelled
- Offer them an incentive to reverse their cancellation decision
- If the cancellation is due to a faulty payment process, or a glitch on your website, send them real-time messages to retrieve the lost sales
- Use messaging automation for payment reminders, due date reminders, account updates, etc.
Segments to target with post-cancellation follow-up strategy: middle and late stages
6. Collect Customer Feedback
To increase customer retention and decrease customer churn, retailers need to understand ‘why customers churn’. To understand that, brands in today’s digitalized world depend on data.
One way to collect data is via customers’ activities and interactions at various touchpoints. For example, on your website, social media, campaigns, etc.
Another, more straightforward way to collect data is to ask customers for feedback.
Here’s what you can do:
- Ask for feedback after different actions taken by customers. For example, purchases, returns, etc.
- Collect feedback in general about loyalty programs, brand experience, website, etc.
- Be ready with your feedback campaigns
- Automate feedback collection via automated messages, live chat, WhatsApp, etc.
- Once you collect feedback, get in touch with customers who have given a low rating and address their issues
Segments to apply feedback collection strategy: all segments – early, middle, and late stages
7. Pay More Attention to your Loyal Customers
Let’s consider this hypothetical scenario – Say, you suddenly notice a rise in your customer churn rate. You begin to panic and focus all your attention on retaining those customers.
In the process, you start ignoring your most loyal customer segment. Since your loyal customers have had a long-term relationship with you, you begin to feel it’s okay if you don’t communicate with this segment for a while. But that’s not true. They start feeling like they don’t matter to your brand and you don’t need them anymore.
As a result, they leave.
A simple strategy to keep your loyal customers engaged while you get busy is to create one-off campaigns just to stay connected with them.
Here are some examples:
- Create generic campaigns that can be personalised
- Offer small discounts and incentives
- Throwback to old collections
- Send them simple thank you messages to let them know you are thinking of them
Segments to which you must apply this strategy: loyal customer segment, late stages
8. Create a Subscription or Membership Model
Customer retention is about extending your customers’ journey with your brand. And one of the best ways to do so is to have a subscription or membership model for your business.
You can determine whether to have a subscription or membership model based on the products or services you offer. Customers who sign up for subscriptions/memberships enter into long-term relationships with your brand. For example, quarterly, half-yearly, annual, etc. These can be continuously renewed, thus, increasing your customer retention rate.
Here’s how subscriptions help brands boost customer retention:
- Customers sign up for long-term subscriptions
- It helps boost engagement opportunities
- Makes customers feel special and exclusive and want to transact more with brands
- It offers benefits and perks to customers that entice them to stay loyal to brands
Segments to target with subscription/membership: all segments – early, middle, and late stages
9. Celebrate customers’ special occasions
One of the easiest eCommerce customer retention strategies is to make your customers feel special by celebrating their special days such as birthdays, anniversaries, etc. When you make customers feel special, it helps build more trust.
- Send wishes on customers’ special days via messages on WhatsApp, SMS, Messenger, etc.
- Offer them a discount or a gift
- Help them celebrate by making their day better
- If you have a loyalty program, allow them to donate their reward points and make them feel good
Happy Birthday, George! It’s your special day, and we hope we can make it more special for you. Enjoy 20% off on all products on our site: www.shop.com. Only today! Use code: HappyBirthday20
Segments: early, middle, and late stages
10. Measure RFM Metrics
Recency, Frequency, Monetary value (RFM) is a way to analyse three quantitative measures based on how your customers behave after purchasing from your site.
Frequency: What is the frequency at which they buy from you? While some customers would buy from you frequently, some may just buy once and never come back to your eCommerce store.
Recency: When was the last time a customer bought something from your site. If it’s recent, say a week or a month, they’re more likely to buy more and stay loyal to you for longer. If a customer hasn’t bought anything from you for a year, they may not do so in the future.
Monetary value: How much does a customer spend on your site? Their spending capacity is the monetary value, which you should expect them to spend the most time.
- Measure RFM metrics of customers
- Rate them on a scale of 1 – 5 based
- The customers with the highest score are your most loyal customers
- Create retention campaigns based on the scores and the efforts you’d have to put to retain each category
Here’s a diagram that explains RFM:
Segments to which you must apply RFM strategy: middle stage, demographic, purchasing power, etc. segments
11. Tell your Brand Story
Good products and services apart, today’s customers choose to buy from brands they resonate with. Customers like brands that share value, vision, and purpose that align with their thinking.
You need to tell customers your brand story to leverage your brand’s bigger purpose. Not just once at the acquisition stage, but always, over and over again.
Here’s how you can do this:
- Make your brand story a part of your brand communication
- Align your marketing campaigns with your brand story
- Collaborate with other brands that share your purpose
- Make customers a part of your purpose, and thus, the brand story
Segments to which you can apply this strategy: all customer segments – early, middle, and late stages
12. Educate Customers about your Product/Service
One of the worst mistakes that brands make is to assume that consumers know their products and services. Even your new customers might not have a good understanding of your products or services. Similarly, when you launch new products, your old customers won’t know much about it.
That’s why you need to educate them.
Here’s how you can go about it:
- Create resources and reading material on your website
- Have a dedicated FAQs section for your products and services
- Provide a chat or contact on your FAQs page if customers want to know more
- Approach different segments with unique strategies
- Focus on your new customers as they may not have information about your products
- Reach out to customers in real-time via SMS, WhatsApp, live chat to ask them if they require more information
Example: This is what internet service provider Earth.Link does. A dedicated team of representatives initiate a chat with customers who spend more than 90 seconds in their knowledge centre or click on contact us. By using chat, they’ve reduced calls by 8%.
Segments to which you can apply this strategy: early, before- and post-sales stage segments
13. Enable Conversational Marketing
Gone are the days when brands spoke to customers via ads and promotional messages, and customers simply purchased from the brands.
Today’s customers like to connect with brands. They question brands. Have discussions. And engage at a much deeper level than merely monetary transactional connections.
71% of customers expect brands to have a two-way conversational approach to marketing and promotions. Meanwhile, 79% of brands say a conversational marketing bot has positively affected customer loyalty and retention.
Here’s how you can make conversational marketing a part of your plan:
- Personalise conversations to drive more engagement
- Create conversational ads that generate responses, comments and interactions
- Send real-time messages based on customers’ actions on your website to generate more conversations
- Send messages that encourage them to reply and have a conversation
(Read more about conversational marketing here.)
Segments: early, middle, and late stages
14. Keep Adding Value to Customers
Customer’s relationship with brands is not just transactional anymore. Today’s customers want deeper engagements with brands. They want brands to understand them, their needs, attitudes, values, and personalities.
Customers prefer brands that make products, services, and communication relevant to them. Because all these factors add value to customers.
How can you add value to your customers? Take a look at the steps below-
- Share personalised recommendations
- Cross-sell and upsell products that add value to them
- Conduct surveys to understand how you could better their experience and then address there requirements
- Make customers a part of your bigger brand purpose. For example, through charity, in supporting causes, to spread the message for a cause, etc.
- Create a list of value elements for each of your customer segments to understand how you can add value to each customer segment
Example: The fashion brand Everlane encourages conscious consumers to buy environmentally friendly clothing from their store and become contributors to the larger mission to save the environment.
Segments to which you must apply this strategy: middle and late-stage customer segments
15. Create a customer loyalty program
Customer loyalty programs are one of eCommerce businesses’ most common customer retention strategies. That’s because when done well, customer loyalty programs can boost customer retention rates.
Consider these numbers:
- More than 90% of businesses in the US have loyalty programs
- The average customer is a part of 14.8 loyalty programs
- 72% of customers have signed up for at least one loyalty program
Still, wondering how customer loyalty programs can help you with customer retention? Here are some of its benefits that can lead to increased retention rate:
- Helps improve customer engagement
- Provides customers opportunities to earn rewards and stay engaged
- Gives special benefits to customers
- Makes customers feel exclusive
- Helps foster long-term relationships with customers
Segments that can benefit most from customer loyalty programs: early-stage customer segments
The above are some of the many eCommerce customer retention strategies that brands can include in their marketing plans. If you haven’t implemented retention strategies for your online business, it’s time to pull up your socks and get started.
However, you don’t need to implement all the strategies in one go. The more efficient way to go about customer retention would be to start with a few of the above strategies. Select the ones that are most relevant to your products/services and business goals.
Do not hesitate to experiment to test out which strategies work best for you. Because if they aren’t helping you meet your business objectives, it’s pointless to waste your time and resources on those strategies.
One of the best ways to implement your strategies is to integrate messaging tools to help you automate your tasks. For that, hundreds of brands trust LimeChat – the best tool to automate customer interactions on live chat, WhatsApp, Instagram, and Messenger.