7 Ways Retailers Can Increase Customer Retention
by EasyPost
It’s no secret that ecommerce customer retention can be a challenge. In fact, the average direct-to-consumer ecommerce brand only retains around 28% of its customers, according to a report by Metrilo. That’s why in this article, we’re breaking down the basics of ecommerce customer retention and sharing six ways retailers can improve their retention rates.
What is customer retention?
Customer retention is the percentage of customers who make a second purchase from a store. In other words, it’s a measure of how well a store is able to keep its customers coming back.
Many factors can impact customer retention, including the quality of products, the level of customer service, and the overall customer experience.
In ecommerce, customer retention is still the same measurement used in traditional retail, but it comes with a different set of challenges. First, ecommerce storefronts don’t have the opportunity to build relationships with customers in person, as the online experience is limited. On top of that, ecommerce shoppers have more options when it comes to where they shop online, so it’s important to stand out from the crowd.
Why is customer retention important?
In ecommerce, customer retention is important because it can be more difficult to build relationships with customers who shop online. With so many online retailers to choose from, it’s easy for customers to take their business elsewhere if they’re unhappy with their experience.
High customer retention also helps ecommerce stores make more money over time and builds a competitive advantage. The more loyal customers a store has, the more likely they are to recommend the store to friends and family, creating an extended network of new loyal customers.
How to calculate customer retention
The percentage of customers a business retains during a given period of time is its customer retention rate. It can be calculated with this formula:
((CE - CN) / CS)) x 100 = CRR
- CE: Total number of customers at the end of the period
- CN: Number of new customers acquired during the period
- CS: Number of customers when the period began
- CRR: Customer retention rate
For example, let’s say a store has 1000 customers at the beginning of a three-month period. During those three months, they gained 700 new customers and ended up with a total of 1100 customers. These numbers can easily be plugged into the formula.
((1100 - 700) / 1000)) x 100 = 40
After doing the math, we can see that 40% of customers were retained during those three months. Calculating this equation is crucial in order to keep track of your progress as you improve how to retain customers.
Improving ecommerce customer retention
Ecommerce retailers can use several methods to improve retention. We recommend these seven customer retention strategies.
1. Excellent customer service
One of the best ways to improve customer retention in ecommerce is to provide excellent customer service. This includes responding to customer inquiries quickly and resolving issues efficiently. Whether it’s shipping delays, returns, or damaged products, a positive customer service experience can majorly impact the customer’s overall impression of a business.
When customers have a positive experience with customer service, they’re more likely to be satisfied with their purchase and come back for more. And, of course, this leads to increased profits. Simple changes, like using consistent policies, adequately training employees, and taking a positive approach to interactions, can go a long way in improving the customer service experience.
Example: Zappos
A prime example of excellent customer service in ecommerce can be seen in the practices of Zappos, the renowned online shoe and clothing retailer. Zappos is known for its exceptional customer service, often going above and beyond to assist customers with any questions or issues. From their 24/7 customer support to hassle-free returns, Zappos focuses on creating a positive experience for shoppers, resulting in increased customer satisfaction and repeat business.
2. Seamless customer experience
Another way to improve ecommerce customer retention is to focus on creating a seamless customer experience. This means eliminating friction points and making it easy for customers to find what they’re looking for and checkout without getting sidetracked.
In ecommerce, customer experience is everything. Your website needs to be easy to navigate, your products need to be easy to find, and your checkout process needs to be simple and straightforward. Otherwise, shoppers may get frustrated and take their business elsewhere.
If you’d like to move beyond the basics, you can go above and beyond in your customer experience by offering features such as live chat, order tracking, and free shipping. This will impress customers and help them have a smoother and more pleasant shopping experience.
Example: Wayfair
Wayfair, a popular home goods retailer, excels in providing a seamless customer experience. With a user-friendly website, intuitive product categorization, and a straightforward checkout process, Wayfair ensures customers can easily find and purchase the items they desire. Since incorporating augmented reality features that allow customers to visualize furniture in their own spaces before making a purchase, their customer shopping journey has been enhanced.
3. Loyalty rewards
Many businesses choose to reward customers for their loyalty. This can be accomplished by offering loyalty programs, discounts, and other incentives to customers who make multiple purchases from a store.
For example, you could create a loyalty program where customers earn points for every purchase they make, and those points could then be redeemed for discounts on future purchases. Or you could offer a discount to customers who make multiple purchases within a certain period of time. Get creative in ways that keep customers coming back.
Example: Ulta Beauty
Ulta Beauty effectively employs loyalty rewards to retain customers. Their Ultamate Rewards program offers various tiers of benefits, including points for purchases, birthday gifts, and exclusive discounts. By offering personalized deals and rewards, Ulta encourages repeat purchases and strengthens customer loyalty within the competitive beauty industry. This customer retention strategy ultimately provides an incentive for customers to make future purchases from Ulta Beauty.
4. Personalized marketing and community building
Personalized marketing communications can also support customer retention. This may include automated abandoned cart emails, order follow-ups, and social media advertising relevant to a user’s viewing history.
You can also personalize product recommendations to shoppers on your website based on their purchase history. This encourages them to find new and interesting products that they might not have considered otherwise.
While you’re at it, use those targeted markets to create a community around your brand. This can be done by engaging with customers on social media, hosting events and meetups, and generating content that specifically targets your customers' needs. Sharable content may even expand your brand’s reach.
Building a community is also a great way to learn about customer wants and needs. Responding to requests and following through on them is a great way to build relationships and keep customers coming back for more.
Example: Sephora
Sephora, a cosmetics retailer, stands out for its personalized marketing and community-building efforts. Through tailored product recommendations based on customer purchase history and interactive online beauty communities, Sephora creates a sense of belonging and personalization. By engaging customers both online and offline, Sephora fosters brand loyalty and customer retention.
5. Trust and Confidence
Another way to improve customer retention is by building trust and confidence in your brand. Shopping online can be a risk, especially when it comes to personal information. Consumers visiting a website for the first time are often unsure if it’s a site they can trust.
Put shoppers’ minds at ease by taking steps to inspire first-time visitor trust, and you’ll see an increase in online sales. Trust indicators like the Norton Shopping Guarantee will boost their confidence with tangible benefits.
It works by displaying trustmarks throughout the shoppers’ journey on the bottom corner of your website and on your product cart pages, reassuring your customers that you are a trusted merchant. The Shopping Guarantee includes the following benefits for your shoppers:
- Identity protection through Allstate for up to $10,000.
- A product purchase guarantee that ensures the product will show up on time and as expected.
- A lowest price guarantee that pays the difference if the price drops in the next 30 days.
Incorporating a third-party endorsement and shopping guarantee onto your site will convert a higher number of first-time visitors and will keep your satisfied shoppers coming back for more.
Example: BBQGrills.com
BBQGrills.com, a family owned ecommerce retail store for backyard grilling, works hard to build customer loyalty. Their high-end products, excellent pricing, and amazing service aren’t found elsewhere in their industry. They need their customers to feel confident in their purchase. To build that trust, they leverage the Norton Shopping Guarantee trustmarks on their website and in their shopping cart. As a result, BBQGrills.com has seen increased conversion rates, higher average order value, and greater customer retention.
6. Customer feedback implementation
Finally, make sure to regularly seek customer feedback and use it to improve the customer experience. Businesses can accomplish this through surveys, customer interviews, and focus groups.
Customer feedback is essential to ecommerce retention because it gives businesses direct insight into what their customers want to get out of their shopping experience. It may uncover problems you weren’t even aware existed. Listen to feedback when given and use it to make changes to your website, improve product offerings, and enhance the overall customer experience.
Example: Etsy
Etsy, a platform for handmade and unique products, emphasizes customer feedback implementation. By providing a platform for customers to leave reviews, offer suggestions, and engage with sellers directly, Etsy fosters a dynamic feedback loop. This enables sellers to continuously improve their offerings and enhances the overall shopping experience, ultimately driving customer retention and loyalty.
7. Shared Values
What values is your brand known for? Businesses that stand for strong values like eco-friendliness, charitable contributions, or advocating for important human rights build even more trust and connection with their customers. Being a source of good for your customers by demonstrating easily identifiable values makes it easy for them to get behind your brand.
Here are some specific ways to share your company values with your customers:
- Use recycled or eco-friendly materials
- Donate 3% of revenue to a charitable cause
- Show support to or partner with companies that share values your business would like to magnify
- Use positive trends on social media to your advantage by being part of them
- Create marketing campaigns that include advocacy for important values
Don’t stop there. Once you establish the values of your business, it is time to make it obvious to your customers by talking about it.
Increasing customer retention with EasyPost
EasyPost’s suite of shipping APIs don’t just help you streamline logistics – they can also help increase customer retention. With real-time tracking, transit time predictions, and more, businesses can improve their customer experience and, in turn, increase customer retention.
And with our simple integration process, you can start using EasyPost in minutes. Sign up for free today, or get in touch with one of our shipping experts to learn about how you can boost your customer retention with EasyPost.