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Jessica Hulett
January 21st, 2021

7 Customer Retention Tips From eCommerce Leaders

Start 2021 off right with these tips to grow repeat purchases.

Shopify recently released their annual report on eCommerce trends for 2021, and one of the major highlights was that retention has overtaken acquisition and conversion as a top priority for many businesses. This development is due to rising acquisition costs, as well as the fact that many eCommerce brands saw unprecedented growth in new customers in 2020, as customers further shifted from in-store to online shopping.

Improving customer retention by just 5% can increase profits by 25%-95%, so it’s worth investing in. As part of our Amazing Women in eCommerce Europe event, we spoke to four inspiring, innovative women on the cutting edge of eCommerce about their top strategies for customer retention.

Launch a loyalty program to reward customers

Loyalty programs are one of the best ways to boost customer retention. According to Yotpo’s own research, 52% of customers would join a loyalty program with a preferred company. Loyalty programs give brands the ability to build relationships with customers, increasing lifetime value and growing sales and engagement.

“We launched a loyalty scheme with Yotpo in July of 2020,” says Sally Minto, Digital Director at Revolution Beauty. The brand employed this tactic to try and retain customers who would purchase once and then never return — and they saw amazing results. Among customers who signed up for their loyalty program, the average order frequency went from just over one to just under four.

Set realistic retention goals for your business

Retention is important, but the degree to which you should invest in it depends largely on the goods and services you offer. It comes down to understanding your customers’ buying patterns and figuring out where you can optimize them — and where you can’t.

“One of the challenges that you have in a business like Made is that the cycles of buying can be incredibly long,” explains Nicola Thompson, COO at Made.com. “It’s not like fashion. Once you buy a sofa, you’re out of that buying cycle for 10 years. New customer acquisition is the core of the business, so it has to be a blend of both.”

Orla Weir, Global Brand and DTC Director at Ugly Drinks, offers a different perspective.

“I think acquisition is your imperative for growth, and then retention is crucial for survival,” Weir says. “Our products in a sense are quite radically different in the way that you’ll drink them all day and you can order on repeat and it can become part of your daily routine. And therefore driving customer loyalty is essential for us. I think how much you focus on those two things is quite tied to the nature of the product that you’re selling and its regularity and frequency.”

RELATED: 10 Customer Retention Strategies That Keep Customers Coming Back

Provide value to your customers to increase loyalty

Providing value to your customers — whether it’s through the standard customer journey or through loyalty rewards and perks — is essential for retention.

“The battle to win is the one for customer loyalty,” says Kajsa Hjelm, eCommerce Manager at Gina Tricot. “It’s not very easy, though. I find it hard to actually find programs that I as a customer really appreciate. It’s not an easy task to just switch to retention instead of requisition. For loyalty, I think the key is to find out what the customers really value. Is it free home delivery, or is it VIP access for the sale, or is it the personal shopper? That will differ from customer to customer.

Don’t know what your customers want? Ask them. Solicit feedback in the form of customer reviews and surveys, and then act on that feedback so you can better support the buying journey and let your customers know you’re listening.

Provide excellent customer service

Customer service can make or break your retention strategy. According to research from HubSpot, 93% of customers are likely to make repeat purchases with companies who offer excellent customer service.

“The bottom line is that customers will come back to you if you have the basics of your business right and you treat them well,” says Minto. “It goes down to the level of your customer service. The customer is right — treat them with the respect that they deserve. If you get that right, you’ll look after the retention piece.

If you consider that 69% of customers would spend more on a company with better customer service, it’s easy to see how improving customer service can help increase retention, even if a competitor has lower prices.

Meet your customers’ expectations for eCommerce experiences

In 2020, many brick-and-mortar businesses saw a larger portion of their sales come from eCommerce. In the age of Amazon, with free, 2-day delivery, many businesses who couldn’t offer similar delivery options struggled to compete.

“Many of our customers made their first online purchase last year,” explains Hjelm. “We converted many retail shoppers into e-tail and what we did last year, we were able to still deliver their orders in one to two days. And we could do that even if we double and triple the e-commerce sales. That will help us with retention for this year.”

The more convenience you can offer your customers — and the fewer fees — the better able you’ll be to position yourself as a viable alternative to eCommerce giants.

Humanize your business

Showing customers that your business is made of real people who are committed to customer satisfaction will go a long way toward building consumer trust, which is another factor that goes into loyalty and retention.

When things go wrong, be open and transparent with your customers, tell them there’s a problem, ask for their forgiveness, do something nice to make up for it, and then fix the problem,” says Minto. “The core of the business is going to be the foundation of how you treat your customers and how you look after them and make sure that you get over some of the hurdles that we come across every day.”

This is a good reason why businesses shouldn’t fear publishing negative reviews. Not only do they enhance the credibility of your positive reviews, but publicly responding to a bad review lets your customers know that you’ll be there to address problems as they arise.

Boosting retention also boosts acquisition

Customer acquisition and retention are both important to any business, and they also work together. The more customers you have, the more opportunities you have for retention; the better your retention, the more likely you are to get referrals and recommendations that lead to more new customers.

“The best form of acquisition and the best way to offset high acquisition costs is to get your existing customers to do your acquisition for you,” says Thompson. “First, you deliver an amazing product and experience. Then you get your customers to talk to other people and that’s some of the strongest and most effective forms of marketing.”

Research shows that happy customers will share their positive experiences with and refer about 11 people to a store or brand. It pays to keep customers satisfied, both for retention and loyalty, and for growing your customer base.

Looking for more information on improving your brand’s customer retention this year? Take our eCommerce Retention Course here.

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