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Why customer retention is so important
Mastering customer retention can be a game-changer for any brand.
Loyal customers help to promote your brand, returning customers tend to spend more, and retaining a customer is cheaper than acquiring a new one.
Retention is cheaper than acquisition
Customer retention is more cost-effective than customer acquisition. People who’ve shopped with your brand are easier to convince and more likely to make a repeat purchase.
Invesp has the numbers to back this up, stating the probability of selling to new customers is 5% to 20% while selling to existing ones has a 60% to 70% chance.
Higher retention yields a greater return on acquisition spend
A Sailthru report found that an increased spend in retention resulted in an almost 200% higher likelihood of increasing market share.
Those figures easily support your return on acquisition spend getting a massive boost as well. That means you can afford to spend more and be more creative to acquire customers.
And, as they stay with your company longer, you can capitalize on your nurtured relationships and increase customer lifetime value (CLV), which is how much they’ll spend throughout their time with you.
Loyal customers are more likely to share your brand
“We learned that word-of-mouth is still one of the most powerful marketing tools. By making the customers happy, they’ll be more likely to tell their friends and family about you.”
“Our most impactful customer retention strategy this year has been optimizing and personalizing our onboarding processes to eliminate any frustration or friction that our customers may have when using our services for the first time….
Focusing on improving our onboarding has helped us improve our customer retention rate by 28% since the end of last year.”
Onboarding is the process of introducing customers to your product or service and is the time when you set them up for future success.
It teaches users how to most effectively use your product or service to its fullest potential and to fulfill their goals.
Onboarding is critical in retaining customers since 86% say they’ll stay loyal if onboarding and education are provided consistently.
Meanwhile, 74% go elsewhere if the process is complex.
The online accounting software Xero simplifies onboarding by presenting an animated “Getting Started” video after signing up.
They take advantage of people’s preference for video over text and put their creativity to work to make an informative yet engaging introductory video.
3. Ensure accessible support
“Over this last year, we’ve doubled our first contact resolution rate to reach 70% in a bid to boost the efficiency of our customer support function. As a result, our customer turnover has reduced by 20% over the same period, indicating that our customers will stay loyal to us if we provide high-quality customer support.”
Quickly addressing customer issues is tantamount to a superb experience.
HubSpot reports that 90% of customers rate an “immediate” response to their questions as essential or very important, and 60% define that as 10 minutes or less.
They also found that 93% of consumers are likely to make a repeat purchase with businesses that deliver excellent customer service.
So, provide support across various channels like live chat, social media, and email, and ensure you’re available throughout the day.
For instance, the pet nutrition brand Dinovite employs this tactic effectively, making their customer service team available across multiple communication channels for easy access.
4. Provide seamless returns
“We’re improving our customer service systems … so they don’t feel like they’re being bounced around people or departments when they need help. We also have a robust returns program that makes it simple to return defective products.”
McKinsey & Company reported 33% of repeat customers would abandon a retailer if their return experience was difficult.
Given this impact on consumer fealty, making the return process as frictionless as possible should be a priority.
Exceeding expectations also endears customers to your brand: It earns their loyalty, as well as boosts your brand.
The pet brand Chewy displayed their excellence in this area by going above and beyond for a grieving pet owner who wanted to return some unopened dog food.
5. Leverage personalization across your channels
“One way to stand out from our competitors, we get personal with our customers. We send them hand-written notes, offer them exclusive deals and discounts, and make an effort to really get to know them.
We retain customers by building loyalty. We offer loyalty programs, give rewards for referrals, and show our customers that we value their business.”
— Jamie Irwin, Director & Founder of Straight Up Search
Epsilon research shows 80% of buyers are more likely to purchase from brands that provide personalized experiences.
Start by offering curated recommendations or content, then expand from there.
Businesses that execute this tactic will earn 40% more revenue on average than those that don’t.
The personal styling brand Stitch Fix is one example of maximizing the power of personalization.
Upon entering their site, customers can take a style quiz to help Stitch Fix understand their sense of style.
Based on their answers, customers are then presented with stylist-approved product recommendations.
6. Create a loyalty program
“Customers want more than just a transaction nowadays—they want security, dependability, personalization, to be valued, and to be treated as more than just a sale.
Our loyalty program allows us to anticipate and meet all these needs that our customers demand be met if they are to continue being repeat buyers. [It’s] seen our average customer retention rate grow by 25% since its rollout.
Moreover, our net promoter score has improved by 10% as our customers are more likely to refer our brand to others because of its good loyalty program.”
The mattress brand Casper executes a top-notch program, targeting both their loyal customers and anyone they refer.
They present referrers the opportunity to earn a $100 Amazon gift card while their friends can redeem a 20% discount.
This easily delights two parties in one go to nurture an existing customer relationship and foster new ones.
8. Consistently educate customers
Regularly providing customers with educational material shows you’re invested in their long-term success.
This can take the shape of informative content like blogs and videos or self-service solutions like a knowledge base and community forum.
These resources expand their knowledge of your offering and can solve customer concerns without them needing to contact you.
One great example of this strategy is Mint, an online banking service that helps people manage their finances.
Their blogs and videos focus on finance, teaching customers how to manage money efficiently. And they even provide free budgeting tools.
Mint continuously engages their customers with their content marketing to provide positive experiences free of charge.
#cta-paragraph-pb#Creating a stunning blog that is regularly updated can provide real value for your existing customers. Shopify has many great blog themes and it’s easy to build a unique blog template with Shogun Page Builder to use for every post.
9. Make shipping convenient
Convenience is a major contributor to ecommerce success, especially with shipping.
Amazon is a paradigm of consistent convenience, as their Prime members enjoy free same-day delivery, among other perks.
Regular users can access the service too, but at an additional cost.
Tip: Invest in omnichannel fulfillment that provides a uniformly high-quality shipping experience, no matter where your customers shop.
10. Express your appreciation
“We strive to make our email marketing messages as interesting as possible. Emails, whether sent before or after a purchase, can aid in the development of a positive relationship with our customers… We usually send a “thank you for your buying from us” email to new customers a week after their first purchase.”
— Sarah Jameson, Marketing Director of Green Building Elements
Thanking customers makes them feel like they matter and shows you value their continued patronage.
One way to secure their loyalty is to express your appreciation concretely—not only through messages but small gifts as well.
The apparel brand Bombas, for instance, sent customers a generous discount for helping them reach a milestone of three million sock donations, which they achieved thanks to shoppers’ purchases.
This recognizes the customer’s contribution and encourages them to spend more due to the discount’s limited nature.
11. Collect and incorporate feedback
“We discovered that social media is the ideal place to collect customer feedback, via their complaints, queries, suggestions, and comments about our services…. Implementation of this feedback is key, as many customers will take to social media to appreciate that we listened to them and did as they asked.
The result is heightened trust between our customers and us, as well as a boost to our reputation. Collecting feedback in this way and implementing it has reduced our customer churn rate by 9% over the last three quarters …”
“I found that it’s essential to provide customers with a great experience from the moment they land on the website. You have to make sure the site loads quickly and is easy to navigate… Additionally, it’s important to streamline the checkout process so that transactions go smoothly and don’t take up too much time.”
No one enjoys navigating a clunky website that makes it difficult to find the information or products they’re looking for.
Your site’s ease of use affects your retention rate because a smooth and easy UI can be a deciding factor in whether your visitors sign up for your newsletter, purchase a subscription, or take some other desired action.
One example of simplifying website navigation is making sure you have a logical top menu structure.
For a clothing company, that might mean segmenting men’s, women’s, and children’s lines in your menu or homepage. For a skincare retailer, it might mean separating brands by pages available on the menu.
Your website is your gateway to capturing customer information—not just for a sale, but also to keep them coming back.
13. Send engaging newsletters
Marketing emails like newsletters keep customers in the know about your brand. They can also be a vehicle of continuous support, engaging content, and rewards.
For example, the visual collaboration platform InVision leverages newsletters to curate educational content that guides designers toward long-term success with the brand’s products and services.
Newsletters can also reward readers by alerting them of limited-time deals.
This creates a sense of urgency while presenting an enticing opportunity to save money on products that typically cost more.
Namecheap, a company that provides affordable domain registering, hosting, and managing services, adopted this approach, showcasing monthly product deals and promotions to their subscribers.
Sprinkling deals into newsletters can keep existing customers returning for more.
14. Nurture a community
Building a community around your products or services can attract potential customers who want to enjoy similar benefits and share related interests with like-minded individuals.
More importantly, it helps existing customers form connections, further enriching their experience with your brand.
Using its app, runners can connect with friends and others in their neighborhood or anywhere else in the world for accountability partners, running advice, and more.
Members can also create challenges and experiences, then share them with family, coworkers, or other club members to strengthen the sense of community among Nike runners.
15. Encourage positive change
Consumers nowadays are more socially and environmentally conscious.
They make sure their purchases support a good cause or have as little negative impact on the earth as possible—so much so that 55% of buyers are willing to pay more for products and services that positively change the world.
You can foster loyalty by building an eco-friendly or charitable platform, such as adopting practices that leave less of a carbon footprint or donating a portion of sale proceeds to a specific cause.
Ethical practices are so influential that 90% of people are likely to switch to brands they believe support a good cause.
Take TAMGA Designs as an example: This sustainable clothing brand hopes to inspire change within the fashion industry, so they conduct business through an ecologically responsible supply chain, using materials that have a minimal environmental impact.
#cta-paragraph-pb#Many brands codify their do-good bonafides into their mission statements, which tell their existing and potential customers who they are and why shoppers should support them.
16. Be persistent
Inevitably, some customers will leave your website before completing a purchase.
When this happens, remember your objective is to win them back for the long term, not just one transaction.
To change their mind, you can, for example, include an incentive in a cart abandonment email offering the shopper a deal they can’t refuse.
Your profit from the purchase may be lower, but you could secure a potentially loyal customer, which is the more valuable trade-off.
Columbia Sportswear employs the same tactic, presenting price drops to prospective buyers who’ve abandoned their carts.
Implement smart customer retention strategies to supercharge your CLV
Customer retention can significantly affect your business’s long-term profitability.
Once you calculate this crucial number and understand its supporting metrics, you can maximize retention by embracing powerful strategies that inspire loyalty.
The tactics we’ve presented will guide you toward that end, helping you improve not only your customer retention but also your brand’s growth.
#cta-visual-pb#<cta-title>Build a better Shopify store<cta-title>Try Shogun for free and start building out your perfect store to create a totally unique customer experience.Start building for free
Rachel is a remote marketing manager with a background in building scalable content engines. She creates content that wins customers for B2B eCommerce companies like MyFBAPrep, Shogun, and more. In the past, she has scaled organic acquisition efforts for companies like Deliverr and Skubana.