Every store owner is excited at the sight of an increase in the number of new customers acquired within a period.
Customer retention rates can be a good measure of the growth of an e-commerce store. It is commendable to gain new customers to increase sales.
However, having your existing customers return to buy again has a greater chance of increasing your average order value per customer compared to a first-time buyer who might be testing the waters with a relatively low order value.
This is because returning customers tend to have grown their trust in a store they have patronized before. This is where customer loyalty comes into play when it comes to buying and selling.
Table Of Content
1. What is customer retention?
2. Importance of customer retention
– Increased AOV
– Increased sales
– Increased revenue
– Depicts Higher Level of Customer Loyalty
3. How To Increase Customer Retention And Customer Loyalty
– Offers & Discount Deals
– Customer Loyalty Program
– Good Customer Experience/Support
– Email Marketing
– Personalized Shopping Experience
The bounce rate for first-time buyers is about 50% which is quite high. They are less likely to return after their first purchase unless they are well-satisfied with the purchase.
That is why returning customers are more valuable. Approximately 50% of all e-commerce sales are generated by them. Sales Lion discussed that returning customers spent $2.7 billion in the 4th quarter of 2015 which is twice the amount spent by new customers.
The point of this conversation is how to keep your customers coming back to buy more. How then can you increase your store’s customer retention rate as a Shopify merchant?
What Is Customer Retention?
Customer retention rate is an e-commerce performance index that tracks the number of repeat purchases a customer makes at a store. A customer returning to buy a gain from a Shopify store shows that customer loyalty has been gained.
Customer retention implies that a first-time customer places another order after their first purchase. Similar to how some grains are poured into a funnel while some pour out, some will be retained.
Customer retention is directly proportional to customer loyalty. The only reason a customer is returning to buy again from your store is that they have trusted the brand enough to make them their go-to shopping store for that item.
Importance Of Customer Retention
1. Increased Average Order Value
A returning customer who is familiar with the brand is likely to have an increased order compared to a new buyer. A new buyer can buy just one item to check the efficiency of the store.
50% of sales recorded by e-commerce stores are generated by existing customers who make repeated purchases. While new customers also account for a chunk of orders for an e-commerce store, returning customers are likely to make more purchases.
For returning customers, there are marketing strategies to keep them coming back. You can attach a discount or free shipping offer to their next purchase. You can put up a free shipping deal with an order target on your home page or product page with StoreBundle’s Free Shipping Bar app for Shopify stores.
2. Increased Sales
With the goal of gaining higher sales numbers for every Shopify store, gaining customer loyalty that results in customer retention and return purchases. This is a surefire way to build a stellar sales record.
Increasing sales using customer retention gives e-commerce stores a more stable value in terms of sales and profit. A returning buyer will continue to buy from time to time.
3. Increased Revenue
When there is an increase in order value per customer, it will result in increased profit. This is plausible since average order value is linked to increased sales and customer retention is a way to increase the average order value.
An increased profit is an evidence that your AOV is relatively high. Let’s say, for instance, your total order for a period is 50 with a revenue of $1000. The average order value will be $200. That is a higher portion of your orders from $200 and above.
4. Depicts Higher Level of Customer Loyalty
A customer coming back after the first purchase to buy again from a store shows that they have built trust around the store. And are comfortable getting more products from the store.
After every first purchase, customers are already familiar with the business practices of the store, which influences whether to come back or not. Customer retention rates, therefore, show the presence of customer loyalty.
How To Increase Customer Retention And Customer Loyalty
1. Offers & Discount Deals
A sure way to get more sales is by offering your visitors or customers deals that are irresistible. Having personalized offers attached to their next purchase can nudge your customers to return to your store.
Sending your customers a discount offer that can be activated on their next purchase is a way to improve your customer retention rate. Most online shoppers look out for stores that can give them a price off their purchases. This way you can stop them from considering your competitors.
2. Customer Loyalty Program
Once you find your way around gaining your customers’ trust, retaining them will be a seamless job. The first step in increasing customer retention is to create a satisfying and enabling shopping experience.
A customer who had a pleasant experience shopping and navigating your website will find it easier to search for a product and tour your store for their next purchase.
With StoreBundle you can make product navigation easy for your customers with the Instant Search app. You can also upsell popular and other collections in the search box based on customers’ intent.
3. Good Customer Experience/Support
A good turn deserves another. This is the same as when you give your customers the most satisfying customer experience.
There are many ways you can leave a memorable impression of your store with your customers that can nudge them to return. Thank you pages, product bundles, free shipping offers, discounts, and cart upsells can make your customers return.
4. Email Marketing
Personalized email outreach can influence the customer to buy again from your store. Emails help you keep your customers engaged and improve their trust level in your brand.
When you personalize your email content, you make the customer feel at home, and you also give them an opportunity to learn more about your products, services, and offers.
The customer retention rate for email marketing is quite impressive, with a 74% increase, and the nurture sales increase is 78%.
Giving your customers the chance to give feedback on their purchases shows them you value their input. Based on their reviews, you will be able to improve your marketing activities.
Feedback and reviews show customers you are ready to improve your store to meet their needs. A thank you page also can help you bond with your customers. Showing appreciation can make customers return to buy again.
6. Personalized Shopping Experience
Designing your store to give your customers a personalized experience helps you improve their loyalty. It also gives them a chance to get deals and discounts based on their interactions with your store.