Customer Retention: A Complete Guide for Founders, Merchants, and Marketers

In the digital shopping arena, catching a customer's eye is just the opening act.

The question is, did they stay for the entire performance? Did they cheer for an encore? Or better yet, did they buy tickets to see another show?

Your show is the products in your ecommerce store. And your best audiences are those repeat customers who keep coming back for more.

Many companies go all-in on acquiring new customers but forget about a key growth driver for their business — customer retention. If you haven’t already developed a strategy for supporting your retention efforts, this guide will help you understand and prioritize the key aspects of customer retention.

What Is Customer Retention? 

Customer retention refers to a business’s capacity to maintain existing customers over time. Many businesses use this as a key performance indicator that can influence strategic business decisions. 

In general, effective retention programs include tactics like establishing loyalty programs, improving customer service, enhancing the post-purchase experience, and personalizing the customer experience. There are many more ways that you can improve customer retention, and we’ll dive into those here today. 

Why Customer Retention Matters for Ecommerce Businesses

Customer retention is a more cost-effective way to increase revenue than trying to get new customers. In fact, it’s five times cheaper to retain customers than to acquire new ones. This doesn’t mean it’s easy to retain customers. It just means they’re further along in the customer journey, and now it’s your job to keep proving your worth. 

Here’s why focusing on customer retention is important for your business: 

1. It's cost-efficient

Low customer churn means less effort and costs devoted to getting new customers.

2. It increases overall revenue

Whether your retention efforts help increase average order values (AOV) or just generally keep loyal customers coming back for more, profitability goes up. 

3. It provides a predictable revenue stream 

When you have many loyal customers, their customer lifetime value (CLV) goes up and can help put your mind at ease when it comes to finances. 

4. Repeat customers provide valuable feedback and data

From what makes a satisfied customer to which products are most popular, all of this data can help improve your business.

5. Repeat customers can be your best brand advocates

Through word-of-mouth recommendations or a referral program, happy customers can help get your business in front of potential new customers. 

6. A loyal customer base gives you an edge over your competitors

When you make yourself a brand customers can rely on, they’ll choose you over your competitors every time. 

Maintaining or increasing your retention numbers is all about meeting or exceeding customer expectations so you can keep the churn rate low. We’ll dive into how to do that in the next section. 

Case Study Example: Legendary Foods

Legendary Foods increased AOV 15% when they switched to Rebuy Smart Cart equipped with personalized recommendations and Buy More, Save More widgets.

Practical Tactics for Improving Customer Retention Before and While They Shop 

There are various customer retention strategies you can carry out before and during the customer shopping experience. From your online store UX design and product pages with strategic descriptions to direct access to customer service, it’s important to test out different ways to optimize your customers’ experiences. 

Two of the most crucial aspects to optimize are the shopping cart and customer communications. Focusing on improving these two can be especially beneficial for your retention goals. 

1. Optimize the Shopping Cart 

One way to increase retention is to provide a top-notch shopping cart experience for your customers. We like to say that the checkout process begins in the cart. That’s why the bane of every ecommerce store’s existence is shopping cart abandonment.  

Luckily, you can update (or entirely replace) your current shopping cart to increase the likelihood that shoppers make a purchase. For example, if you don’t already have one, use a modern shopping cart that leverages AI and machine learning technology to cater to individual customers.

This type of shopping cart should have automation features that allow you to try different cart recovery techniques. Here are a few tactics you can implement:  

• Display personalized product recommendations and bundles based on the items in the cart. 
• Use a progress bar to motivate customers to spend more until they unlock free shipping, a discount, or a free gift.   
• Use exit-intent popups that provide an extra incentive to stay and purchase the products, such as customer reviews or a limited-time discount offer. 
• Send abandoned cart emails or text messages to capture those shoppers who left your site. 

2. Personalize Communications to Existing Customers  

To make your existing customers feel valued, personalize their messaging and marketing whenever possible. These customer relationships are unique and vital to your business. So the communications and retention marketing strategy you use for them should be different from the one you use for potential new customers and leads. 

Create guidelines for your marketing and customer support teams on how to interact with existing customers versus new ones. This should be applied to retention emails and text messages and when engaging on social media, in community forums, or through live chat.

To further personalize your interactions with your current customers, segment them into groups. For example, your repeat customers should get different messaging, options, and offers than long-time subscribers get. A repeat customer might get an email with a special offer to join a customer loyalty program or a recommendation for a specific product. A subscriber might be offered a reward for sticking with you through thick and thin! 

Case Study Example: OLLY

See how OLLY increased subscription revenue 63% and AOV 25% by re-engaging customers with mood-enhancing personalization. 

 

For both types of customers, asking for feedback after a purchase is incredibly important. It’s helpful information that can improve your products and make your customers feel like their opinions are valued, a key to strengthening relationships and retention.

3. Enhance the Checkout Experience to Encourage Repeat Buyers

Like the modern shopping cart, the checkout page can also be optimized to increase customer retention. A streamlined and user-friendly checkout process is critical to foster customer loyalty and repeat purchases.

A checkout page featuring testimonials, AI-powered product offers, and trust badges.

To spruce up your checkout process, try these tactics:  

4. Use transparent design to build trust

Make it clear what the prices, shipping costs, and taxes are. It should be easy to follow the chain of events during checkout. Use a progress bar for each step, and include a link to FAQs for information on things like your return policy and refunds.

5. Offer multiple payment options and free shipping

Include digital wallets and localized payment methods to cater to diverse customer needs and increase convenience.

6. Implement a one-click purchasing or guest checkout option

Even if they have an account with you, make it easy for them to purchase without one if that’s what suits them.

7. Make it easy to get in touch with customer service

Whether through email, live chat, or a phone number, make the contact info readily available so customers can ask last-minute questions before ordering.

7. Ensure the checkout process is secure and trustworthy

Use visible security badges and assurances to reassure customers your site is safe.

8. Suggest relevant products, bundles, subscription upsells, or exclusive deals at checkout

This is especially helpful when it enables the customer to save on something they might not have known they wanted to purchase. 

9. Display customer reviews

Positive customer reviews are a form of social proof that can persuade a customer who’s on the fence about buying a product. 

Case Study Example: Magic Spoon

Magic Spoon chose Rebuy’s services to present shoppers with personalized product recommendations and subscribe-and-save offers. The result? AOV for Rebuy-influenced offers went up by 14.75%.

 

Post-Purchase Tips for Re-Engaging Customers

Re-engaging your customers after they’ve made a purchase is another great way to increase customer retention. A great post-purchase experience can help you stand out from your competitors. 

Part of what makes it a successful experience is that it’s timely and relevant. There are a few common moments you’ll want to re-engage with your customer post-purchase: right after a recent purchase, when the customer hasn’t purchased in a while, or when the customer hasn’t visited your online shop in a while.

Rebuy Reorder Landing Pages are packed with features that allow your customers to reorder their favorite products, discover new products, upgrade subscriptions, and complete their purchases in seconds. Learn how Reorder Landing Pages help you re-engage your customers.

After a recent purchase, send the customer:

• A thank-you email or welcome series that includes personalized offers
• Tracking and shipping information, along with outlining a clear and simple return process  
• A request to review a recent product, along with customer service contact information
• A product or bundle recommendation based on a recent purchase 

When the customer hasn’t made a purchase or visited your online store in a certain amount of time (of your choosing): 

• Offer them a discount or special offer based on their recent browsing activity or customer behavior.  
• Share a new product that would pair well with something they’ve previously purchased. 
• Remind them about your business and send a special offer like a gift with a purchase. 

Of course, there are many other opportunities to increase customer engagement, such as during the holidays or when a sold-out product becomes available again. Whether you use incentives or simply share an exciting update with the customer, the post-purchase experience can help you boost loyalty and customer retention. 

How to Track and Measure Your Customer Retention Efforts

Tracking and measuring your customer retention efforts will help you discern which strategies are working and which to forego.

First, you’ll need to figure out which customer retention metrics you want to track. The obvious KPI you don’t want to skip is your customer retention rate (CRR).

To find your latest CRR, follow these steps:

1. Choose a specific period of time you want to analyze — typically a recent month, quarter, or year.
2. Identify the total number of customers you had at the start of the period.
3. Determine the number of customers at the end of the period.
4. Identify the number of new customers gained during the time frame.
5. Calculate the CRR by subtracting the number of customers you had at the end from the number of new customers you acquired. Then divide by the number of customers you had at the beginning. Finally, multiply that number by 100% to convert the ratio to a percentage.

For example, say you’re measuring CRR over a quarter. If you started the quarter with 200 customers, ended with 90 customers, and gained 20 first-time customers during that quarter, your CRR for the quarter is 35%.

Depending on your industry, that might be much lower than the average customer retention rate. But CRR is not the only metric that can help you improve retention. Other metrics to track include customer churn rate, repeat purchase rate, product return rate, time between purchases, AOV, and CLV. 

Once you have this data, you can use it to double down on the successful tactics and keep your retention rate high. 

Improve Customer Retention with Rebuy 

You don’t just want happy customers. You want customers with brand loyalty. Customers who rely on you to meet their needs and desires. But consistent customer satisfaction is not a given in a constantly shifting ecommerce landscape. As technology and commerce evolve, so do the preferences and expectations of shoppers everywhere. 

Rebuy can help you design intelligent shopping experiences that keep you relevant and in demand even in this changing ecommerce terrain. With a checkout optimization suite, you can implement dynamic, data-driven strategies that adapt to the evolving needs and behaviors of your customers, ensuring a seamless and personalized shopping journey at every touchpoint.

Ready to boost your customer retention numbers? Request a demo and see why over 10,000 brands use Rebuy to power their personalization.

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