4 Minute Read

Investing in your eCommerce customer acquisition strategy is important for a retailer to stay competitive and flourish but customer retention is just as important if not more so. Existing customers shop more often and have a higher average order value.

Because customer acquisition costs are increasingly higher and traditional marketing and advertising strategies are less and less efficient, it is essential to develop an effective customer retention plan that will increase each client’s lifetime value. Loyalty research from Accenture Strategy found that traditional ‘low price, reliable service’ mechanics are not as effective as they used to be.

Effective customer retention programs will increase customer engagement and purchase frequency.

  • It can cost almost five times as much to attract a new customer than to keep an existing one.
  • The probability of selling to existing customers is 60 – 70%, while the probability of selling to a brand-new prospect is only 5-20%.
  • Existing customers are 50% more likely to try new products and spend 31% more when they shop.
  • The top 10% of eCommerce customers spend 3 times more per order.
Why It is Important to Invest in eCommerce Customer Retention Strategies

Keep your best customers feeling special and valued.

Reward or Frequent Purchase Programs

Classic rewards programs are point-based. Customers accumulate points that can be applied to future purchases.

  • Customers earn rewards points for every dollar spent that can be applied to future purchases.
  • Customers buy a certain number of products to earn one free.
  • Provide a store gift card when a certain number of points are earned.
eCommerce Rewards Program - Nordstroms

Magento retailers: There are many popular Magento extensions that can be used to integrate reward programs into your website.

Loyalty Programs

Many marketers are looking beyond dollar rewards to create and retain customers. Loyalty programs are longer-term marketing efforts that offer a balanced mix of benefits and rewards to customers who demonstrate loyal buying behavior. Tiered programs can be structured to reward higher spending customers with even more.

  • Free shipping or shipping upgrades
  • Coupons and discounts not available to all customers
  • Access to advance release products
  • Exclusive content and events
  • Rewards for writing reviews, social sharing, and referrals
  • Offer VIP benefits or membership programs for a small fee – think Amazon Prime

Read Accenture’s report on the evolution of loyalty and tailoring your rewards programs to meet the expectations of younger generations including Millennials.

eCommerce Loyalty Programs - Sephora Example
eCommerce Loyalty Programs - Ugg Example

Magento retailers: There are quite a few Magento extensions that can be used to integrate loyalty programs into your website. Cloud-based solutions such as Smile.io (Formally SweetTooth) and Zinrelo are also options but incur monthly fees.

Provide Personalized Content

The demand for personalization in retail is real and it’s growing. Almost 70% of online shoppers indicated that they want and expect more personalized shopping experiences. The goal of personalization is to make it easier for your customers to shop and buy the products they want – when they want them.

eCommerce Website Personalization Increases Sales

Personalization software uses data from your eCommerce store to create relevant shopping experiences for individual website visitors. eCommerce personalization is often based on demographics, purchase or browsing history, past consumer behavior as well as customer profiles and interests.

  • Recommended products based on individual customer preferences
  • Coupons for products you know your customer’s like or have bought before
  • Personalized offers and web content
  • Featured products based on past purchase history
Magento eCommerce Website Personalization - Fabletics Example

Magento retailers: Fresh Relevance is a digital personalization software platform used to deliver personalized content and messages to customers.

Refer a Friend Bonus Programs

Word of mouth is a great way to grow your business. An important marketing goal should be to develop brand advocates out of your most loyal and informed customers so they tell others about you. These customers have purchased from you and are familiar with your brand and product’s value. Generally, the referrer and the recipient receive a financial reward that encourages them both to keep referring – and shopping.

Magento eCommerce Refer a Friend Programs - Fabletics Example
Referral Candy - eCommerce Refer a Friend Programs

Magento retailers: Referral Candy is one platform you can use to develop Refer a Friend programs.  There are also quite a few Magento extensions available to get you started.

Send Post Purchase Emails

Extend your personalization efforts beyond your website by using personalized email correspondence. Email is one of the most essential communication channels retailers have.

  • Deliver cart recovery emails to customers who have unpurchased products in their carts
  • Send subtle prompts to customers who haven’t visited your website in a while
  • Email a coupon offering a discount on the next purchase along with product recommendations based on previously browsed or purchased items.
  • Send some recommended products to customers who haven’t purchased anything from you recently
  • Personalize the subject line of your email messages with relevant product data
  • Send emails to customers requesting an online review of a product recently purchased
Klaviyo - Personalized Emails for Your Magento eCommerce store

Magento retailers: Email autoresponders, such as that provided by Klaviyo, use data from your Magento eCommerce platform to deliver highly relevant and personalized marketing messages to customers.

Klaviyo Personalized Emails for your Magento Store

Establish an Emotional Connection

Younger audiences, especially, are apt to buy from a company whose values are aligned with theirs. Harvard Business Review found that one of the most effective ways to maximize customer value is to move beyond simple customer satisfaction and relate to consumers at an emotional level. Studies show that emotions are the main drivers in the decision-making process – not logic.

  • Emphasize how your products will make a buyer “feel” including how the purchase might increase feelings of comfort, confidence, safety, enjoyment, empowerment, passion, etc.
  • Focus on the functional benefits of your products
  • Align yourself with causes that matter to your consumers
  • Convey your brand story. Unlike traditional advertising, your brand “story” will inspire an emotional connection that makes you more than just a commodity. Brand stories go beyond what you do. Statements about your company’s legacy, personality, and values make you more relatable and will generate trust and authenticity.

Many customers choose to align themselves with a brand they trust that offers a sense of meaning and purpose. Patagonia, an activist company that commits itself to the protection and preservation of the environment, does a great job of connecting with customers on a personal level. Their values are reflected in every aspect of the business, from infrastructure and logistics to partnerships and fair labor.

Patagonia - Establish an Emotional Connection with Your Customers

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