Are E-commerce Customers Difficult to Retain? What Can Be Done?

In your e-commerce business, should you focus on customer acquisition or customer retention?

Unfortunately, there’s no simple answer to this question. Your business needs to both acquire and retain customers to maintain its growth trajectory. That said, there are many interesting studies about the importance of customer retention. For instance, one classic HBR survey found that retaining customers by just 5% can potentially increase a company’s profits by anywhere between 25 – 95%. In favor of retention, one more study proved that 50% of existing customers easily try new products of the brand. Existing customers require five times less investment. And in the case of a new customer, the probability of successful selling is only 5 – 20%.

Clearly, customer retention matters. For your e-commerce business, a high customer retention rate can directly impact:

  • Sales, revenues, and ROI
  • Repeat sales
  • Customer relationships
  • Customer lifetime value (CLV)
  • Referrals

And yet, customer retention is not easy in eCommerce. Why? And what can you do about it? This blog explores!

The Challenges of Customer Retention in E-commerce

Customer retention refers to your ability to keep existing customers coming back to your online store and purchasing from you repeatedly. In the e-commerce sector, several factors impact customer retention. One of the most significant factors is customer experience (CX).

For many e-commerce customers, it’s not just the price or quality of goods that matters the most. These buyers also care about aspects like: 

  • Product discoverability and availability
  • E-commerce website navigation and user experience
  • Range of available payment options
  • Friendly customer service – both automated and human
  • Mobile shopping options

Get these factors right, and you can deliver excellent CX that boosts your retention rate. Fall short on anyone, and the impact on CX will directly impact your customer retention numbers. 

Another important driving factor is delivery speed. One 2020 benchmark survey found that in addition to the product and the shopping experience, customers also demand speedy delivery in the post-Covid era. The survey also found that 37% of buyers would not return to a retailer after a “bad” delivery experience. Delivery speed can affect this experience and the overall ability to retain customers.

Personalization is also a critical driver of customer retention. Generic messaging or incentives tell them that you don’t care about them. In return, they will switch brands very quickly, and you will have a tough time bringing them back (if ever). Nevertheless, personalized landing pages, emails, offers, and text messages can all make a customer feel valued and appreciated, increasing the likelihood that they will stay with you and keep coming back for repeat purchases. 

Strategies to Increase Customer Retention (Sales and Profits)

Customers often care more about the shopping experience than they do about products. That’s why delivering excellent customer experiences is one of the most effective ways to boost customer retention. By offering a great CX, you can increase customer satisfaction. Later on, this will lead to a higher rate of customer retention.

 How can you do this? Here: 

  • Deliver your promises on time. So, same-day delivery means same-day delivery, not someday delivery!
  • Communicate any delays. Most customers are empathetic as long as you honestly communicate your limitations and action points.
  • Offer incentives and rewards to repeat customers.
  • Simplify your app and website navigation, and make sure they are accessible to all users.
  • Regularly engage with existing customers through personalized email or SMS marketing. Make each message timely, relevant, and customized.

Another strategy to increase customer retention is to offer excellent customer service. A single below-par service experience can sour even long-term customer relationships, so you should invest some resources in improving your service function. There are many ways to do this, thanks to the availability of cutting-edge tools and technologies. For example, with conversational Artificial Intelligence tools, you can offer live chat on your website. You can also add automated chatbots to enable quick responses, ensuring fast turnaround, higher first-call resolution (FCR), and minimal waits, holds, or transfers.

Other retention-oriented customer service strategies are more “people-related.” One is to train your support team to practice active listening and empathy, and to focus on solutions rather than the problem. The second is encouraging the service personnel to use positive and authentic language in every customer interaction. “X is the best option” is usually better and more empowering than “Don’t select Y.” And last but not least, communicate clearly to help customers, whether talking about a problem, a solution, a choice, or a mistake.

So far, you have explored the importance of experience and service in improving customer retention. There are many other things you can also do to increase retention:

  • Set up a customer loyalty or rewards program which will  increase word-of-mouth referrals, repeat purchases, and ultimately retention.
  • Offer shipment tracking. According to Forbes, customers track their shipments 4.6 times for each online purchase. With shipment tracking, you can meet their need to know about the status of their order. Simultaneously, you can leverage opportunities to drive higher retention and boost sales in this post-purchase stage.
  • Stay in touch with existing customers.
  • Engage with existing customers by sending them special offers, discount codes, event invites, and birthday greetings. Give them a reason to return.
  • Continually tweak your personalization strategy.
  • Keep collecting customer insights to anticipate their needs, tailor your future offerings, and show them how your brand can improve their lives. All of this can have a positive impact on customer retention and loyalty.

Conclusion

In the customer-driven world, it’s not easy to retain customers or claim their long-term loyalty. Hence, your e-commerce business must implement robust retention strategies that give customers a reason to stay. This article covers many such strategies. Implement them, and there’s no reason why you can’t create a tribe of loyal customers and brand advocates.

Ergode can help your e-commerce brand chart its growth path through tailored customer retention and acquisition strategies. Contact us to discuss your key retention challenges and create a roadmap to address these pain points in the shortest possible time.

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