How to Build An Effective Customer Retention Strategy for Your Online Store

14 min read

For a hyper-competitive industry like ecommerce, where the cost of clicks and conversions is always on the rise, attracting new customers is becoming increasingly difficult. Not to mention costly.

On top of all that, the COVID-19 crisis has changed consumer behavior for good, creating new challenges and making the retention of old customers not just a matter of choice but a necessity.

As Gartner puts it, “the COVID-19 crisis has shifted marketers” focus from customer acquisition to customer retention and growth.”

But even if you take the pandemic out of the equation, a customer retention strategy is essential for ecommerce. Why is that? Because recurring revenue from loyal customers can increase an ecommerce company’s average total revenue by up to 40%.

Additionally, a regular income stream from repeat purchases enables ecommerce businesses to plan their growth and resource allocation in a more effective way.

Think about it: when was the last time you made efforts to re-engage your old customers, or tried to build brand loyalty? Don’t remember? If that’s you, then it might be time to start implementing the tactics below to accelerate your ecommerce customer retention strategy, and grow your revenue along the way.

But first, let’s understand what customer retention actually means.

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What Is Customer Retention Rate?

Customer retention indicates how many customers remained loyal to your business over a period of time. It is generally expressed in terms of a customer retention rate (CRR) that is calculated by the following formula:

Customer retention rate = [(E — N) / B] * 100

B = Customers at the beginning of a time period
E = Customers at the end of the same time period
N = New customers added during the time period

The CRR varies by industries. You can’t possibly compare the CRR of a beauty brand with that of a gaming brand. The products are different, and so the rate at which customers repurchase from your store will vary drastically. So, compare your CRR against your industry benchmarks, and if your number doesn’t stack up well, try some of the tips below to grow it.

Tips for Building a Great Ecommerce Customer Retention Strategy

Building a fail-safe ecommerce customer retention strategy is easy if you know the right tactics and tools. So let’s take a closer look at some.

Send Personalized Emails to Customers

Personalization is the key to staying connected with your customers, and encouraging them to repurchase from you. You need to build a personal connection with your customers through all the engagement channels at your disposal. The most intuitive platform then, is through email.

As of now, 53% of Gen Zers and 49% of millennials feel they get “too many” emails from brands. If you want to break away from that norm and cut through inbox noise, you need to harness the power of personalized emails.

In a personalized email, you tailor the messaging, timing, and targeting according to each recipient’s unique needs. This, in turn, helps attract more people to open their emails, and drive desired actions.

Want to know the best part? Your customers already have some level of trust in your ecommerce company. If you make them feel special through exclusive deals and tailored content, you can push them to repurchase more easily than random, first-time visitors.

And if you’re able to provide better services to them, you can slowly boost your ties with them and improve your marketing ROI (return on investment).

So, go ahead and add a personal touch to your emails.

But how? Some ideas for you to mix and match:

  • Include the recipient’s name in the subject line, salutation, and body content.
  • Send location-specific content (recommend nearby stores, local deals, etc.).
  • Segment your subscribers as precisely as you can, and then create targeted messages for each segment.

Need an example?

Groove uses behavioral data from subscribers to segment their email list and smooth out their onboarding experience. Subscribers who’ve signed up for Groove’s newsletter but have been unresponsive since then get emails like this from Groove:

Image via Groove

The email copy and CTA are focused on gauging user sentiment through customer support.

But subscribers who regularly engage with Groove’s emails get product demos and usage tips in their emails, with the aim of keeping them satisfied, engaged with, and loyal to the brand.

Such hyper-targeted emails are bound to improve customer engagement and retention. And even more than that, personalized emails also need to be perfectly timed to match a consumer’s moment of need.

For example, a customer who wishlisted a product can convert quickly if they are sent an attractive discount coupon for that item. Similarly, a visitor who is spending a lot of time browsing one product category may purchase something if they get a friendly email with product recommendations from that category.

But how can you recognize opportune times for sending personalized emails? You can’t watch every customer’s movement through your site individually, but you can keep tabs on their actions as a segment. Based on that, you can create automated email workflows.

These are synced with your website, CRM system, and sales tools so that they can trigger automatically when a user performs a particular action (subscribes, completes the first transaction, abandons cart, confirms an order, requests a return, etc.).

By putting your email workflows on auto-pilot, you never miss a conversion opportunity, which is what a good customer retention strategy is all about.

Want a shortcut? If you sell online with Ecwid, you can enable automated marketing emails in your store. These are tailored emails sent to your customers when they complete certain actions in your store, like adding a new product to their favorites or making two orders.

The best part is that you don’t have to write an email copy, create and send emails, or segment your customers manually. You just enable automated emails and specify if you’d like to add a discount coupon to them. The emails will be sent out automatically reaching the right person at just the right time and keeping your customers engaged.

The “Come Back for Bestsellers” email brings back inactive buyers: it is sent out to customers six months after their last order

Provide the Option of Creating Customer Accounts

Customer accounts can boost your customer retention strategy in a big way.

Customers get one-click access to their order histories, which allows them to make repeat purchases, request returns, and check order statuses, with ease. They can also quickly access their favourite products, special member discounts, and invoices.

The result? By taking the pain out of online shopping, you put customers instantly at ease. You encourage them to return to your store again after providing them with a pleasant shopping experience.

When used strategically, this tactic can streamline most of your ecommerce metrics from sales to churn rate and beyond.

However, there is a catch: creating a customer account may be considered quite a big commitment by first-time customers, who don’t want to divulge their details to a brand they’ve just met. If given the option, they would prefer to check out as guests rather than fill out detailed contact forms.

But since customer accounts have such an impact on your customer retention strategy, it would be a blunder to neglect them.

The solution? There are two, actually.

First: Give your first-time shoppers an option to create an account, but only after they’ve placed the first order. In their order confirmation email, you can send them a direct invite to activate their account. That should do the trick.

The second and easier option is to create a customer account automatically. For example, if you have an Ecwid store, it can automatically create a customer account for the buyer’s email address after they place an order.

Your customers can log into their accounts at any time through their personal sign-in link sent to their inbox. This is convenient, as shoppers don’t need to remember any passwords to have access to their account. Plus, the login by sign-in link is a more secure way of login than using a password.

After customers click the My Account link in an Ecwid store, the sign-in link is sent to their email

Provide Stellar Customer Support

You can’t retain customers if you don’t serve them efficiently before, during, and after the sale. Proactive customer support will fuel your ecommerce customer retention strategy in more ways than one.

Like what?

When you are available for your customers 24×7, you provide them with a great customer experience (CX), which fosters brand loyalty. Not only that, but customers are often willing to pay a premium of up to 16% in return for good CX.

Custoers are willing to pay higher for good CX (Image via PwC)

If this sounds like a good thing, it’s because it is.

Sometimes, competent and prompt customer service is the only thing required to convert a dissatisfied, angry customer into a happy one.

You can make your ecommerce website a one-stop solution for all your customer needs by incorporating a chatbot or live chat software solution into it. Using this bot, you can teach new customers about correct product usage, solve queries about site navigation, provide shipping updates, and help with whatever else might come up on the fly.

If you sell with Ecwid, you can set up a Facebook Messenger live chat in your store to answer shoppers’ questions promptly. It’s simple to use and all conversations are saved in Facebook Messenger’s inbox. This is handy if a customer asks you a question when you’re offline: the message will pop up once you’re back online so you won’t miss it.

In a live chat, you can help customers to choose a product or tell them about special offers in your store

As we’ve said before, old customers are like equity for a business. Among other things, giving them priority customer support can help cement their loyalty. One way of doing that is by pushing their service requests higher up in the queue using robust ticketing systems.

This way, you enhance your customers’ overall shopping experience, which, in turn, boosts your customer retention strategy.

Harness the Power of Retargeting Ads

Your ecommerce customer retention strategy will get a big boost if you leverage retargeting ads correctly.

Retargeting ads promote products, deals, or services that a user recently browsed, shopped, or expressed interest in. They are more effective than regular ads that are prone to “banner blindness”—a human tendency to ignore banners unless they carry recognizable content.

Just like personalized emails, retargeting ads are also tailored to each user’s needs and interests, and that’s why they have an immense conversion potential.

To create retargeting ads that feed your customer retention strategy, you will have to:

  • Use urgency to create FOMO (fear of missing out).
  • Include compelling customer success stories in the ad copy.
  • Show products that complement a customer’s recent purchase.
  • Keep passive customers in the loop by reminding them of their past buys.

Add information about special offers to your retargeting ads to encourage customers to buy

To find out how to get started with retargeting for your store, read our detailed blog post about retargeting ads.

If you’re an Ecwid seller, you can set up retargeting campaigns on Facebook and Google in minutes with Kliken Marketing. They simplify the process of setting up your campaign so that you can convert window shoppers into paying customers with ease.

Ready to Create an Ecommerce Customer Retention Strategy?

As you can see, for ecommerce brands, a customer retention strategy is non-negotiable.

If you’re still not inspired to formulate a customer retention strategy for your ecommerce company, here’s a parting thought:

Not having a customer retention strategy means your ecommerce brand misses out on major cost savings, referral traffic, repeat purchases, and other customer loyalty benefits.

Are you looking for more ecommerce-related sales or marketing tips? Let us know in the comments section below.

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About the author

Gaurav Sharma is the founder and CEO of Attrock, a results-driven digital marketing company. Grew an agency from 5-figure to 7-figure revenue in just two years | 10X leads | 2.8X conversions | 300K organic monthly traffic. He also contributes to top publications like HuffPost, Adweek, Business 2 Community, TechCrunch, and more. Social connects: Twitter, LinkedIn & Instagram.

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