As an e-commerce brand, you need to fight two battles simultaneously: the one of acquiring new customers, and that of retaining your existing customers, to turn them into regular ones. Many brands tend to focus on the first battle and neglect the second. Big mistake: customer retention is just as important as acquisition!
Why bet on retention, and especially what are the actions to implement, so that your customers come back after their first purchase? Check out our advice in the form of 8 good practices in this article.
What is customer loyalty? 🤔
In marketing, customer loyalty is the ability of a company to retain its customers over time. The goal is to make them come back, that is to say loyal customers, who regularly carry out new purchases of your brand.
Retention is measured using the Customer Retention Rate (CRR), which corresponds to the number of loyal customers over a given period. It is calculated as follows:
Retention rate = [(Total number of customers at the end of the period – Number of new customers) / Number of initial customers] X 100.
Another indicator is also significant in terms of retention: Lifetime Value (LTV). It corresponds to the profits that are generated by a customer throughout his relationship with the brand. The LTV highlights the concrete impact of retention, by analyzing it under the prism of the income which has been generated.
Why loyalty is an essential issue in e-commerce 🙌
Optimizing the retention rate, and at the same time the LTV, is a fundamental issue for any e-commerce brand. Simply because retaining a customer is much cheaper than acquiring a new one.
In the famous book Customer Retention as a Competitive Weapon published in 1990, the authors Dawkins and Reichheld state that "retaining a customer would cost up to 5 times less than acquiring new ones". This figure is obviously very theoretical and differs depending on the sectors of activity and types of products, but he underlines the importance, for all companies, of paying particular attention to retention.
And this is particularly true for e-commerce brands, who are constantly looking for new growth levers. All the more so given the current context, marked by an explosion in customer acquisition costs (CAC). For many reasons, in particular related to developments in online advertising, it is becoming increasingly expensive for brands to acquire new customers.
Thus, it is urgent for brands to seriously bet on loyalty, to ensure their profitability and find more sustainable sources of growth. But how to do so concretely? Here are 8 best practices.
Best practices to improve retention in e-commerce ✅
1. Create a strong brand
To retain your customers and improve your retention, there is no secret: you must offer them quality products and build a strong relationship with them. The goal is to create a community, and to turn your customers into ambassadors of your brand.
Your brand universe must be the basis of all your marketing actions, and of your loyalty actions. Set a mission that resonates with your audience for yourself, work on your messages, build an impactful visual identity which makes you stand out, and produce content with high added value.
2. Measure customer satisfaction
A customer will (most likely) never come back to buy a product from your online store if they were not satisfied with their first purchase. Thus, to optimize customer satisfaction, it needs to be measured.
Ask for as much feedback as possible from your customers, via satisfaction questionnaires for example, to identify improvement areas and resolve these. Calculate your NPS (Net Promoter Score) and monitor it continuously.
3. Bank on customer service
It is very likely that customers will get in touch with your brand before, during or after the purchase, to ask you questions or request assistance. These touchpoints are particularly strategic and greatly influence satisfaction and the perception of your brand.
Set up impeccable customer service: give as much information as possible about your products, facilitate returns, respond to all messages as quickly as possible and in a personalized manner, and pay special attention to dissatisfied customers.
4. Tend to your customer service
To maximize the satisfaction of your customers, and most of all, your retention, you must provide your clients with a smooth experience, but also and most of all an unforgettable one. All the details matter to do so. The order confirmation email, the packaging of your products, the little surprise gifts...
A concrete example? The brand of socks made in France Archiduchesse, does not hesitate to slip sweets, stickers or other little surprises into its orders. This guarantees to trigger a wow effect.
5. Use a marketing email
To improve your retention, you need to find a way to regularly reconnect with your customers after their first purchase has been made. Email marketing is an ideal way to do so, and at a low cost.
For example, you can send campaigns to present your new products, to announce a promotion, to distribute content through a newsletter, to wish your customers a happy birthday... There are many opportunities to forge ties. However, avoid bombarding your customers and falling for spamming, and strive to send the most personalized messages possible.
6. Implement a customer loyalty program
Reward your usual customers to build loyalty for your brand. For example, you can draw inspiration from classic retail brands, which set up loyalty programs on the basis of a system of points.
You can even pamper your best customers by setting up a VIP or ambassador program, with gifts as the key. Either way, show your appreciation and make your loyal customers feel recognized.
7. Encourage your customers in the development of products
A good practice to engage your community and optimize satisfaction: ask your customer base for their opinion on your future new products. Nothing could be more effective for promoting the opinion of your customers, keeping them informed about your brand, and offering them a product that meets their expectations and needs.
An example to follow: the clothing brand Asphalte, which co-develops its products with its customers, and sells all its collections through a pre-order.
8. Suggest a subscription model
What better way to encourage retention, and optimize your LTV, than to offer a subscription system? This is the model on which all the “Subscriptions” are based, and which naturally applies to products consumed daily. For example, coffee: many e-commerce brands like Mokabox or more traditional brands, like Nespresso, offer a monthly subscription.
But in reality, the subscription model can apply to a lot of products. The brand of electric toothbrushes My Variations for example, offers a regular delivery of toothbrush heads. The Joone brand markets disposable, eco-responsible diapers, with or without a subscription, as need be.
Your products may not really highlight a subscription system, but at least take the time to ask yourself the question. Many brands don't think about it. And they are very wrong in doing so!