How to retain customers for your ecommerce
When you cultivate loyalty and prioritise retention, you increase the lifetime value of your customers and increase your revenue. It can also help you keep up with your competitors. Continue reading to find out more about important customer retention strategies for your company.
What is customer retention?
Before we get into how to retain existing customers, let’s first discuss the customer retention definition. Customer retention is the process of getting existing customers to continue buying products or services from your business. It differs from customer acquisition or lead generation because you appeal to people who have already purchased at least one product or service from your company.
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How to use Data Analysis for measuring customer retention rate ?
The formula for customer retention, or the customer retention rate, is:
((Number of customers at the end of a period – number of repeat customers) / (number of customers at the beginning of a period)) ×100
Consider an example of a Lipstick company that sells products online. At the beginning of a fiscal quarter, the company records 1,000 total customers. At the end of the quarter, 1,100 customers total are recorded, and 500 of them are return customers. The retention rate for the makeup company is:
((1,100 – 500) / 1,000) × 100 = 60%
It costs less to market to existing customers
Since existing customers already know your business, you spend less on marketing and make more profit on each sale. A slight increase in customer retention can have a dramatic impact on your bottom line. In fact, increasing customer retention rates by 10% increases profits by an average of 30%.
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Strategies for increasing profits and increasing customer loyalty:
- Keep a calendar of customer communications – Track how long it has been since an existing customer has interacted with your company to avoid losing customers.
- Distribute a company newsletter – Email newsletters assist in keeping your brand in the minds of your customers. Email marketing is simple and inexpensive, but it has a surprising return on investment (ROI), with an average of $42 returned for every $1 spent.
- Implement a customer education – Give your customers the information they need to succeed. Your customer education can be centred on your product or service, or it can include additional information.
- Reward customer loyalty – Customer loyalty programs give people who already enjoy buying from your company incentive to come back. Loyalty programs inspire customers to spend more at your business because they receive benefits in return.
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