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Customer retention for eCommerce sellers

By Rebecca Montag | July 24, 2023
Customer retention for eCommerce sellers

Customer retention is a business’s ability to motivate previous customers to come back and make additional purchases.

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For any online seller, customer retention should be a top priority. The reason is simple: retaining existing customers is more cost-effective than acquiring new ones.

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Moreover, attracting a customer to return to your store once often turns them into regular shoppers.

Read on to learn more about why customer retention is important for your business and how to improve your customer retention strategy.

In this article:

  • Why customer retention matters
  • How to improve retention rates
  • Launch personalized email campaigns
  • Start a loyalty program
  • Implement referral programs
  • Build a strong social media presence
  • Maintain sufficient inventory levels
  • Prioritize customer experience

Why Customer Retention Matters

Customer retention significantly contributes to the long-term success of any eCommerce store. Research indicates that it’s six to seven times more expensive to acquire a new customer than to keep an existing one. Additionally, a mere 5% increase in customer retention can enhance a company’s revenue by 25-95%.

Return customers are also more likely to buy more and spend more money than new customers. This contributes to an increased CLV (customer lifetime value) and AOV (average order value).

What’s more, your satisfied return customers are more likely to recommend your product to friends and family. This brings you more customers without the need for expensive marketing campaigns.

How To Improve Customer Retention Rates

Focusing on customer retention is a great way to lower costs and increase sales. Here are some of the top strategies to improve your customer retention rates.

1.  Launch Personalized Email Campaigns

Email marketing is a key strategy for every eCommerce business. It helps you build an ongoing relationship with your customers, which is essential for customer retention. Email serves as a direct line of communication, keeping your customers updated about your products and alerting them to any promotions, sales, or special events that are happening in your store. This strategy can effectively keep your brand at the top of their minds, encouraging repeat visits and purchases.

Here are some ways a thoughtfully executed email campaign can enhance customer retention:

Personalized communication: Personalization is vital for successful email marketing. Addressing customers by name, suggesting products based on their browsing history or previous purchases, and sending out personalized birthday or anniversary discounts makes customers feel valued and appreciated.

Promotional announcements: If you have an upcoming sale or a special discount on certain products, emails are an excellent way to alert your customers. Exclusive deals encourage customers to revisit your store and make a purchase.

Product updates: Regularly updating your customers about new products, restocks, or upgrades piques their interest and often prompts a return visit. This strategy is particularly effective in a fast-changing industry where keeping your customers informed gives you a competitive edge.

Educational content: Beyond just promoting your products, consider using emails to share valuable content related to your industry. Sharing blog posts, how-to guides, or useful tips adds value to your customers’ lives and keeps them engaged with your brand.

Re-engagement campaigns: For customers who haven’t made a purchase in a while, a targeted re-engagement email might be just what’s needed. Offering a special “we miss you” discount or simply reminding them of what they might be missing can rekindle their interest in your brand.

2. Start a Loyalty Program

A customer loyalty program encourages customers to come back to your brand by rewarding them for continued purchases. The more they buy from your company, the more they’ll get in return. It’s a great way to make your customers feel like you appreciate them.

Putting a customer loyalty program in place is simple, and doesn’t have to cost your business a lot of money. For example, with a points-based loyalty program, you give customers points each time they buy something. They can then use their points for freebies or discounts. You can also choose to give loyal customers special discounts, deals, or early access to new products.

A loyalty program is a great incentive for customers to make more purchases. Customers also feel like they’re getting a good deal, which increases their satisfaction.

3. Implement Referral Programs

For any eCommerce business aiming to thrive, implementing an effective referral program should be a top priority. The benefits of a well-crafted referral program are two-fold: it helps attract new customers and encourages existing ones to keep shopping.

A referral program encourages your existing customers to recommend your store to their friends, colleagues, or family members.

They share a unique referral code linked to their account. When someone new uses this code to make a purchase, the customer who referred them is rewarded. These rewards often take the form of discounts or store credits, providing a strong incentive for them to return and buy more products.

Think of it as a win-win-win situation:

  • The referrer wins: The existing customer, who shares the referral code, gets to enjoy a discount or store credit. This incentive not only makes them feel valued but also motivates them to return to your store and make further purchases.
  • The referee wins: The new customer, who uses the referral code, often receives a discount on their first purchase. This makes their initial interaction with your store more enjoyable and can help turn them into regular customers.
  • Your business wins: By implementing a referral program, your eCommerce store gains new customers, retains existing ones, and boosts sales – all with minimal marketing investment.

A well-designed referral program can be an incredibly powerful tool for eCommerce businesses. It can help to spread the word about your products and services, attract new customers, and encourage existing ones to keep coming back.

4. Build a Strong Social Media Presence

In today’s digital age, having a strong social media presence is a necessity for eCommerce businesses. Online sellers can use social media to actively engage with and build a community around your brand. This community is more than just an audience; it’s a network of fans, potential customers, and advocates for your brand and products.

Social media gives your brand a voice and a personality. It provides a platform where you can lead discussions, share insights, and showcase your company’s values. Whether it’s through thought-provoking posts, lively Q&As, or sharing behind-the-scenes content, you can engage your community and deepen your connection with your audience. It gives customers a space to offer their opinions and feedback, too.

Here’s how a well-managed social media presence can help increase customer retention:

  • Encourages engagement: Regular updates about your products and offers and posting industry-related content can keep your brand at the top of customers’ minds.
  • Builds a relationship: Social media allows businesses to interact directly with their customers. Responding to comments, thanking customers for their purchases, and resolving issues shows you value your customers and care about their experience.
  • Showcases your values: Customers today don’t just buy products; they buy what the brand stands for. Sharing content that reflects your brand’s beliefs and values makes your audience feel more connected to your brand.
  • Offers exclusive deals: Social media is an excellent channel to offer exclusive deals or early access to new products for your followers.

Social media is more than just a marketing tool—it’s a community builder, a customer service platform, and a window into what makes your brand unique. So invest in your social media channels, interact with your audience, and let your brand’s personality shine through.

5. Maintain Sufficient Inventory Levels

While it may seem obvious, keeping a well-stocked inventory is a vital aspect of ensuring customer retention. You want to meet customers’ expectations consistently, and there’s no quicker way to frustrate a customer than by running out of the product they want to purchase.

Imagine a scenario where a customer, happy with their initial purchase, returns to your store for more, only to find the item unavailable. This can lead to disappointment and can even push them to explore options from your competitors. Over time, repeated stockouts damage your brand’s reputation and reliability.

Here are some strategies to effectively manage your inventory and prevent such scenarios:

  • Accurate demand forecasting: Use historical sales data, market trends, and seasonal patterns to anticipate future demand. A good demand forecasting system will help you order the right amount of stock, so you’re less likely to run out of popular products.
  • Regular stock audits: Regularly check your inventory to ensure your stock levels align with what’s shown on your website. This can help prevent situations where a product shows up as available online but is actually out of stock.
  • Supplier relationships: Building strong relationships with your suppliers helps ensure a steady flow of goods and quicker restocks when needed. In the event of unexpected demand surges, good supplier relationships may even help you get more inventory faster.
  • Inventory management software: Investing in inventory management software can automate the process and provide real-time updates on stock levels. This helps prevent under-stocking or overstocking situations.

Consistently delivering on your customers’ expectations enhances their trust in your brand. This is what keeps them coming back for more.

6. Prioritize Customer Experience

At the heart of eCommerce success lies an exceptional customer experience. It’s not just about the product you sell, but also how you sell it and the impression you leave with your customers. The complete journey, from the moment they land on your website to the point they receive their product, and even beyond, contributes to their overall experience.

Every touchpoint in this journey—such as the quality of product packaging, the promptness of delivery, and the simplicity of the returns process—can influence how customers perceive your brand. A positive, seamless, and enjoyable shopping experience boosts customer loyalty and motivates them to make repeat purchases.

Here are some ways to prioritize customer experience in your eCommerce business:

  • Superior product presentation: It’s essential that your product arrives in high-quality, well-branded packaging. It shows customers that you care about their purchase and adds an extra touch of professionalism.
  • Swift and reliable delivery: In today’s fast-paced world, customers expect quick, reliable delivery. Aim to provide various shipping options, including express delivery for those willing to pay more for speed.
  • Effortless returns process: A clear and hassle-free returns policy can transform a potentially negative situation into a positive experience. This shows customers that their satisfaction is your priority.
  • Responsive Customer Service: Quick, empathetic, and solution-oriented customer service can make all the difference in how customers feel about your brand.
  • Personalized shopping experience: Tailoring the shopping experience makes them feel special and valued. This can involve personalized product recommendations, special offers, or simply a friendly follow-up email.

By prioritizing customer experience, you not only encourage existing customers to come back but also build a reputation that attracts new customers. After all, happy customers often spread the word about their positive experiences, becoming advocates for your brand in the process.


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