Ask nearly any business owner what their business goals are for the next year, and you'll undoubtedly get an answer revolving around one simple, yet vague objective:


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But there are countless ways to grow a business.

And all of those tactics range greatly in terms of the time, money and effort it takes to bring them to fruition.

After all, growth isn't a product of not spending any time or money on a specific strategy.

Yet, while most brands out there are focused on net new customer acquisition in order to hit their "growth goals," can I suggest a tactic many brands aren't focusing on -- and that will save you money and time?

It's called customer retention.

I know you've heard of it before, but stay with me: Oftentimes, business owners get so caught up in trying to reach and earn new customers, they forget about their existing high-value, low-effort assets: existing customers.

Why is retaining existing customers so important?

For a few reasons:

  1. They've already bought from you before. Data shows repeat customers spend 67% more on average than new customers.
  2. Earning increased loyalty and love from current customers increases the chances they will recommend you to friends. Word-of-mouth marketing, or friendly recommendations made over dinner, is the most common way your brand can find net new customers.
  3. You don't have to spend money to go find these people. You already have their email addresses. Now, you just have to figure out how to engage and influence them.

So let's dive in.

Every single customer is hard earned.

The process of gaining a new customer can take months, as you strive to:

  • Make them aware of your brand
  • Create content to engage them
  • Retarget ads to various segments
  • Continually optimize your site
  • Send email campaigns

Then, rinse and repeat every single one of those steps.

Focusing instead on re-engaging customers who are already in your ecosystem can save you time, effort and money by minimizing this process and maximizing your output.

Once a customer has converted, you no longer have to convince them to give your site and products a chance.

You simply need to tempt them to return and convert once again (and again, and again).

Returning customers are so valuable for most ecommerce businesses that an average of 80% of revenue comes from just 20% of customers.

If you're looking to grow your business, implementing one or more of the following customer retention strategies can help you receive a bigger ROI for much less work.

6 Ways to Boost Your Customer Retention Rate

1. Adjust pricing

How long has it been since you set your prices?

Many business owners charge too little when they are just starting out in order to win their first customers.

If you have an item that is selling exceptionally well, test a price increase of 20%.

This simple method is especially useful when selling proprietary products, but can even work for basic items like white tube socks.

If sales decline following the adjustment, that may be a sign you've set the price too high; but you may be surprised by how much you can raise your prices without seeing a drop in sales.

2. Increase order value of every sale

Ensure every customer checks out with something extra in their cart by adding cross-selling and upselling strategies to your site and communications.

Upselling to shoppers in a physical store is easy -- you can place related products next to each other or use other merchandising techniques to draw attention and drive impulse purchases.

But online shoppers often start their journey in search of a particular item, which is why you must be strategic to catch their eye with cross-selling and upselling.

According to Amazon, up to 35% of its revenue is solely attributed to its cross-selling strategies, including its "Frequently Bought Together" and "Customers Who Bought This Item Also Bought" sections.

But cross-selling and upselling look different for every business.

A good place to start your upsell strategy is by looking for patterns in past sales data.

  • Are there two or more items that customers often buy together?
  • What items complement each other naturally -- for example, a pair of socks to go along with the shoes a customer is viewing?
  • What items do you have that also come in more expensive, feature-rich versions?

These tactics can also be implemented on a more basic level; for example, by offering free shipping by reaching a cart total or gift wrapping for customers who add a certain item to their cart.

Here's an example of an upselling strategy in practice: ArtisResistance offers free shipping once a shopping cart reaches a certain price:


3. Build a loyalty program

Everyone likes to be recognized, and implementing a program to reward your most loyal customers is an easy way to build on your relationship and provide regular incentives to return to your store.

Building your own customer loyalty program may sound labor intensive, but most ecommerce platform marketplaces offer loyalty program apps that can make it easier to manage.

Start by identifying your top customers by diving into your CRM and viewing customers who spend the most with you per month or quarter. Then, email the top 10% of customers an offer each month.

You can test which offers are resonating with which customers, then fine tune your rewards over time. You'll eventually know which customer demographics, actions, and preferences predict a successful conversion after an offer.

Rewards can range from a thank you note to free shipping or 10% off for those who haven't engaged with you in a while.

After you get your basic program set up, you can expand it by adding a points system, allowing customers to earn points for actions like sharing your content on social media.

Take for example Shop4Vitamins, an ecommerce site selling a range of supplements in a highly competitive market.

The supplement market is so competitive, in fact, that emerging competitors began selling their vitamins at-cost to steal business from more established brands. The owner of Shop4Vitamins developed a loyalty program in response, to keep his customers engaged and loyal.

The program is based on a simple, yet generous system that rewards customers with 10-15% cash back on every purchase. And since launching the loyalty program, Shop4Vitamins repeat orders grew 265% from $21,441 to nearly $57,000 per year.

The most important things to remember when implementing a loyalty program is to keep it simple. Make it easy for customers to understand what steps to take to earn rewards, and make it easy for them to use those rewards. If it isn't easy to understand, customers aren't likely to sign up or stick around.

4. Personalize the buying journey

Another way to recognize your shoppers is by dialing into the small ways you can personalize their shopping experience.

Just a few examples:

  • Say hello. Encourage visitors to sign up for an account once they land on your site by offering a small discount on their first purchase. Use a form to collect their name, email address, birthday and other personal information you can use to improve their experience. The next time they return to your site, you can display "Welcome back, (Name)" on their cart or automatically display the correct currency based on their location.
  • Monitor preferences. How did you acquire this visitor? Were they viewing a piece of content or an ad that led them to your site? Do they frequently browse a certain type of product? This information will help you write, design and place ads that work for each segment.
  • Change it up. Expand on the previous tip by changing up the site experience for customers each time they return. This can be as simple as changing the messaging on the page, or creating customized merchandising or landing pages based on their preferences.

5. Offer a recurring subscription service

Offering a monthly subscription service can boost your customer retention rate.

This requires some thinking inside the (subscription) box, but as of late, some of most surprisingly successful subscription services have found success simply by catering to online shoppers' need for convenience.

Even if you don't have the type of products that can be sold using a subscription model (e.g. art), consider selling add-ons like on-retainer customer support or insurance.

Once you're ready to set up your subscription service, search your ecommerce provider's app store for an integration like Subscrimia that will make automated payments and orders easy for you to keep up with.

6. Meet your customers wherever they are

All of your marketing efforts shouldn't exist in silos.

It's likely that you are already utilizing social media, ads and email to showcase your brand; but it's important to note that each platform should work cohesively to provide a seamless experience for your customers -- and a multi-layered marketing strategy for you.

When visitors come to your site for the first time, request that they opt-in to your list. If they don't convert, you can send them an abandoned cart series or "we miss you" email to get them to return.

Once a visitor comes to your site, you can also retarget Facebook ads to them by installing a Facebook pixel on your site. This tracks visitors and builds a warm list of potential customers that you can serve ads to over time.

This marketing trinity allows you to monitor your visitors' actions as they move between platforms and learn how they interact with your brand, what inspires them to visit your site and what pushes them to convert or abandon their cart.

This data allows you to home in on customer preferences over time so you can offer the right content at the right time on the right platform, ultimately driving more return sales.

Use This Customer Retention Checklist to Get Started

  • Raise your prices
    • Take a baseline measurement of your monthly sales volume
    • Raise your product prices 20%
    • Measure your results after one month to see if your total revenue is increasing
    • Adjust price downward if needed until sales volume improves
  • Cross-sells and upsells
    • Analyze sales to find patterns
    • Set strategy
    • Add upsells in the following places:
      • Product pages
      • Checkout page
      • Confirmation page
      • Receipt email
  • Build a loyalty program
    • Find your most valuable customers by looking at the top 10% of revenue drivers on a monthly or quarterly basis
    • Choose and integrate an app to help you manage your loyalty program
    • Design first three months of offers and email communications to test what your loyalty members respond to
  • Personalize the buying journey
    • Set up first-time visitor pop-up on website
    • Design and A/B test various landing pages based on customer browsing activities and preferences
  • Design subscription service
    • Decide which products to offer
    • Design marketing campaign to promote subscription service
    • Add subscription service upgrade option on product pages and checkout page
    • Choose app or integration to process automatic payments and feed recurring orders into your channel manager
  • Evaluate omnichannel strategy
    • Install Facebook pixel on website to feed into custom audience list
    • Drive list sign-ups through a form on your website or ad campaign
    • Segment users into groups based on the ads they react to and send email campaigns targeting their actions

Investing your time, energy and marketing dollars into bringing back return customers just makes financial sense. There are many different ways to drive repeat business, but what it boils down to in the end is showing your return customers that you value them while making it as easy as possible for them to come back and buy again and again.

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 Customer Service Metrics

Originally published Feb 8, 2018 8:00:00 AM, updated October 30 2019


Customer Retention