Editor’s note: This is a guest post by Shahzad Saeed who is a freelance blogger and content marketer
It’s a known fact that the retention of existing customers is cheaper than the acquisition of new ones. Sadly, only 32% of customers actually order second time over the course of the first year. That is, most customers are leaving your store after the first purchase.
If you have been in the e-commerce business for a while and haven’t considered customer retention as a serious strategy, you’re leaving a lot of money on the table.
In fact, if you could successfully nurture the leads, through different phases of the customer lifecycle, you can increase the overall ROI and eventually increase the overall lifetime value of customers.
So, let’s see how you can retain your existing customers in 2016 for your e-commerce store.
E-commerce Retention Strategies
E-commerce Remarketing TACTICS
If you haven’t leveraged remarketing yet, this is the right time to do so.
Remarketing helps you to target your potential customers by displaying customized ads on Facebook or websites that are part of Google Display Network. Remarketing can be a great idea for many reasons. Unlike most of the e-commerce marketing methods, remarketing allows you to precisely target people who are interested in your products and is also helpful for displaying ads with reduced cost per impression.
For your e-commerce business, here are a few ideas for remarketing which go a long way for customer retention:
Re-engage existing customers: If you’re launching a new category of products on your store, you can entice your customers to return to your website. In fact, if a customer hasn’t visited your website for a while, chances are they might not be aware of the new release. So remarketing can be a good idea here.
Reduce shopping cart abandonment: If you’ve been in the online retail business for a while, you might know that shopping cart abandonment is one of the biggest challenges in the e-commerce business. According to Baymard.com, the average documented online shopping cart abandonment rate is 68.53%. Remarketing can be used to reduce the shopping cart abandonment rate. With email remarketing, Peak Design recovered 12% of abandoned carts.
Cross-sell related products: A common tactic in the e-commerce industry is to remarket existing customers by cross selling related products. Popular remarketing tools like Facebook Custom Audience and Google’s Remarketing Lists for Search Ads (RLSA) allow you to remarket customers for 180 days once they’ve engaged with you.
Send targeted emails
According to a study by RJMetrics, only 32% of customers are likely to place a second order in their first year as a customer. This rate is also known as the average repeat purchase.
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Knowing the average repeat purchase of your store will help you to create strategies to re-engage with your existing customers more often and thereby generate more revenue per customer through retention.
For example, once a customer makes a purchase for the first time, you can send targeted follow-up emails to re-engage with them and thereby earn their loyalty to your brand. This will ultimately bring in more repeat purchases and, therefore more revenue.
In addition, you can also send targeted emails to those “lost customers” who made their first purchase and didn’t return. For example, Hostgator.com encourages lost customers to re-engage with their brand by providing a special 75% discount if they re-open their hosting account.
Let’s take a look at another example. Flippa.com entices users to relist the domain name for free if they’ve not successfully sold it at the first attempt.
Though Hostgator and Flippa are not in the online retail business, this strategy of re-engaging a lost customer is absolutely applicable to any e-commerce business.
Craft a personalized offer
Get Drip is a marketing automation tool that allows you to send personalized emails to your leads and customers. Using the tool, you can tag your prospects into a distinct group on the basis of email clicks, purchases, pages they visit or any custom event you set.
The best thing about segmenting your prospects into distinct groups is that you can craft future marketing and sales emails specifically targeting each group. In fact, according to a Marketing Sherpa study, personalizing emails on the basis of segmentation can increase sales revenues by 50%.
Here are a few ideas for email personalization:
- Teach what your customer is missing: Let’s say that you recently launched a mobile app for your store. You can send customized emails to your customers introducing the app, who probably didn’t know it existed. The idea here is to teach a customer what they didn’t know about your product.
- Notify your customer about an activity: If a customer recently added a product to the cart but didn’t complete the purchase, you can notify him to complete the purchase.
- Send weekly offers: Send a customized email promoting products they’re more likely to buy.
Subscription based model
From magazines to e-commerce, the subscription-based business model is rapidly becoming the norm in every industry. This business model not only helps you retain your customers for a longer time but opens up a profitable recurring revenue stream as well.
A lot of pay-per-product based companies are also offering subscription-based delivery such as Sight Glass Coffee and Amazon Prime. On the other hand, some e-commerce startups are entirely based on the subscription model like NatureBox and Blue Apron.
The subscription business model can be a win-win strategy for both you and your customers. Customers win as it provides them greater convenience and they can worry less about running out of products. You win because it opens up a stable recurring income.
Apart from customer retention, here are a few reasons how it will ultimately help you grow your business:
- It predicts business revenue better: For predicting revenue, standard businesses normally make assumptions by analyzing previous sales statistics. However, the subscription economy model provides a better way to forecast the revenue through recurring sales.
- Inventory management: Inventory management can be a hassle in a standard economy model. Needless to say, buying too many or too few products can be a disaster for your e-commerce business. A subscription model helps you manage inventory better; you can save lots of money that would have been wasted in a standard model.
Over to you
Retaining your existing customers is as important as acquiring new customers. What are your favorite ways to retain an existing customer? Would you like to add more points that I missed? Share your thoughts in the comment section.