Online competition is growing every day. From retail sales to consulting services and healthcare, most industries are heading to the internet to find more customers.
While new customers are essential to building any business, there's even more success in keeping your current customers happy.
If you're wondering why retention marketing is essential to your e-commerce business, here are four things you need to know.
1. Acquisition versus Retention Marketing
Both retention marketing and acquisition marketing are strategies to grow your business. What sets them apart is the type of customer each plan targets.
Acquisition focuses on landing new customers, and retention marketing centers around keeping your customers coming back.
Also, acquisition drives new customers to your website to get them to make a purchase.
Some of these strategies include:
- Paid Advertising
- Social Media Advertising
- Paid Search
- Organic Search
The thing is, new customer acquisition typically takes time and investment, as consumers must first find you. Then they consider your service or product, usually comparing it with your competitors before buying anything.
In contrast, retention marketing campaigns deepen your brand's connection to its customers. These strategies revolve around building a loyal repeat customer base, considering the overall lifetime value of those relationships.
Retention marketing encourages customers' repeat business and concentrates on the customer's experience. In short, it builds brand loyalty.
2. Loyal Customers Are Priceless to Your Business
First, customer retention costs less than acquisition. Estimates show it's five to 25 times more expensive to gain new customers than to keep existing ones.
The thing is, customers are more likely to be comfortable spending money with brands who've proven they're trustworthy and reliable. According to ThinkImpact, 56% of consumers say they're more loyal to brands that understand them.
You can only really get to know your customers by repeatedly engaging with them. And when you do, something remarkable happens. Their lifetime value grows over time.
That's because the longer they stay with your brand, the more money they spend on upsells. Additionally, loyal customers not only tend to make repeat purchases, but they are also more likely to become brand advocates.
A referral from a loyal customer is gold.
It's a snowball effect that makes acquiring new customers easier. That's because referrals are four times more likely to convert than leads. And it didn't cost your business anything to acquire those new customers.
3. Retention Rate and Success Measurements
Retention marketing requires using success metrics such as:
- Customer Churn
- Product Return Rate
- Repeat Purchase Ratio
Finding out which success metrics work best for your industry is vital. Not only that, but you'll need to know what the averages are for your industry.
For example, online retail has an average customer churn rate of 22%, and e-commerce businesses have an average retention rate between 30% to 40%. You can use averages for your industry as a benchmark to measure against your retention and churn rates.
To figure out customer retention rates, you measure the percentage of repeat customers over a set time. You could calculate it over a year, by quarters, months, weeks, or whatever time you choose to collect the information.
Customer churn is the opposite of retention, and you measure it over a length of time, as well.
The churn rate equals how many customers you have at the end of the year minus new customers. Then you divide that number by the number of customers you had when the year began.
Understanding why customers don't return is an essential aspect of retention marketing. It can help you make improvements to your products and services.
When your repeat customers stop buying, it could be for reasons from poor customer service to slow shipping. Additionally, it might be something out of your control or a standard in the industry.
There's an average retention and churn rate for every industry.
4. Retention Market Strategies
You can use various tactics to improve customer retention, including
- Content Creation
- Loyalty and Rewards Programs
- SMS Marketing
Reengaging customers who have abandoned their carts is one of the most successful ways to ensure repeat business. In fact, one of the most significant problems e-commerce businesses face, regardless of the industry, is cart abandonment.
To that end, an abandoned cart email strategy is not only a good idea, but it's also vital to building your business.
Similar to customer churn, there are many reasons why consumers abandon their carts. For one, they may get ready to buy, then find out that add-on fees cost too much.
How many times have you changed your mind because shipping and taxes increased the cost of an item? Another big reason is that delivery should be shorter.
And sometimes, their credit card gets declined. Part of customer retention is understanding the variety of reasons your customers abandon their carts.
The good news is identity resolution software can help you re-engage customers who've shown interest. Identity resolution is about examining the data to determine your buyer's identity and what matters to them.
Ultimately, retention marketing is all the work you do to understand your customer better. Then you can give them an overall experience that keeps them returning for more.
Retention Marketing Solutions for Your Business
Your e-commerce website needs tools to decipher and measure all of that data. For example, tools like Google Analytics and Retention.com work together to gather information and measure your efforts.
Retention.Com is a retention marketing solutions provider. We provide technology that helps you measure and track cart abandonment and recovery rates.
You can keep all of your customer data in one place, enabling you to use historical data and learn more about your customers' behavior.
Understanding your customers means that you can build campaigns that speak directly to their needs. It takes the guesswork out.
Retention.com's dashboard integrates with over 50 platforms, and you get real-time reports to assist your retention marketing efforts. Find out more about how we can help and book a demo today.