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customer retention

Customer Retention: The Art of Getting People to Buy From You Again and Again

E-commerce 8 min read

When you jump on Google and search ‘Ecommerce marketing,’ you’ll undoubtedly see articles written by some of the most trusted names in the industry. 

While the information presented is incredibly valuable, you’ll find that this information hardly touches on what is arguably the most essential part of ecommerce marketing. 

And that is customer retention. 

These articles seldom broach this topic, as (for some unknown reason) we associate marketing with acquisition – that is, getting new customers. 

But the truth is that customer retention marketing is not only easier, but it also gets more money flowing through your business. 

Some stats to back up that claim:

So it’s clear that including retention into your marketing efforts can pay off immensely. 

And in this article, you’re going to see exactly how to do just that.

Retention based marketing

Retention based marketing is the process of creating incentives for a customer to buy from you again. 

Retention marketing is based on the premise that a past customer is more likely to buy from you again. They’re also more likely to spend more the second time, as they’re familiar and experienced with your brand. 

In other words, your customer has no ‘fear of the unknown’ in dealing with a new brand. 

Long-term benefits of effective retention marketing include:

  • Lower acquisition costs
  • Increased AOV
  • Increased LTV
  • Diversified marketing channels

Retention marketing example

E.l.f (eyes lips face) are a cosmetics brand that has their retention marketing down to an art. 

Their product is effective (a cheaper product that can compete with more expensive options and a consumable), and therefore creates the perfect product for retention marketing. 

Transactional emails encourage referrals. 

customer retention email

The e.l.f. team realised that their transactional emails had an incredibly high open-rate. As a result, they place their ‘double-sided referral’ into the email to push a customer to refer a friend while also getting a discount on repeat purchase. 

To do so, both parties need to join their loyalty program, thus exposing them to even more incentives to generate repeat purchases. Ultimately, a fine example of retention and acquisition marketing rolled into one automated email campaign

How to increase retention:

Before starting to develop a retention strategy from the ground up, ask yourself the following:

Why aren’t my customers coming back to me naturally?

Some reasons that this mightn’t be happening:

If you can find out the reasons why this isn’t happening (and solve them), you’ll see your retention skyrocket without having to put extensive groundwork into a retention strategy. 

That is to say, your retention strategy will be built into your customer’s buying process. 

Add extra and unexpected value

There’s no reason for the local ‘all you can eat’ to give you a free side of chips on your birthday. 

But they do that because they value you, they’re happy you’re there for your birthday and want you to come back again. 

64% of customers say ‘value for money’ is an essential factor in brand loyalty. That means that if you can instill the feeling of ‘gee, I got a lot more than I bargained for’ into your customer when they get your product home, you’ll be heading in the right direction. 

Creating a good product is beyond this article, but there are a few ways you can add a little value quickly and easily:

The fact that you don’t have to do these things (but choose to) is the added value. Like the local restaurant, they give you more than you expect – that’s the value that their product adds. 

Customer service

In a 2017 study, Millennials said that they’re willing to spend up to 21% more with a brand that provides excellent customer service. The same survey showed that Americans tell 15 friends about poor customer service and ‘only’ 11 people about a good experience. 

So it’s clear that merely being there to help a customer is critical.

An engaged customer always presents an opportunity. Someone that’s in the consideration stage of your ecommerce marketing funnel, and reaching out for help, offers a fantastic opportunity to build the foundations of a long-term relationship.

Believe it or not, the same theory applies to an unhappy customer. While 80% of customers will stop doing business with a company due to a poor customer experience, a dissatisfied customer always presents an opportunity. In voicing their discontent, an unhappy customer is essentially asking you to fix something they’re unhappy with – they’re telling you how to make them happy. 

It’s the way that you solve an unhappy customer’s problem that can effectively turn them into a repeat buyer. Don’t just meet their expectations, exceed them. Make the problem right, and then do more than what they’re asking you to do. This is the kind of experience that people tell their friends and family about. 

Subscription models

One of the best ways to foster repeat purchase amongst your customers is the business model that your product is based on. 

And the subscription model is the absolute best at this. If your product is a consumable that’s purchased regularly, consider offering it as a subscription service. 

Spanish brand Surmile knows that kids grow in leaps and bounds. Every two months, Surmile sends parents their pick of toys and clothing from a wide variety of kids brands at a lower price than they’d pay to buy directly from the brand. 

Parents keep the products they (or their kids) like and return what they don’t like. This makes it easy for time-poor parents to get their kids the clothing, toys and entertainment they want, without spending more than they have to. 

Subscription services add extra value to the product in the form of convenience – payment details are entered once and regularly billed, and the product is delivered to their door at a selected interval for a lower price. 

Reactivation

Past customers may have stopped buying from you simply because they forgot that you existed. 

Aren’t you lucky that you’ve got their email address!

Reactivation campaigns can be sent to past buyers depending on the level of segmentation you use. Consider emailing customers that haven’t:

  • Opened an email for a period of time
  • Been sent an email for a period of time
  • Haven’t visited your site for a period of time

These are customers that have purchased from you and have experience with your brand – that trust is there, but a simple nudge in the right direction may be all that’s needed to get them engaged and buying again. 

Discounts

Discounts or monetary-based incentives are the go-to way to build customer retention. 

Consider experimenting with dollar-based and percentage-based discounts. Regardless of currency, items that more than triple digits (100+) are best discounted in dollar amounts. That’s because $30 off a $285 product sounds better than a 10% discount. 

On the other hand, 10% off a $35 shirt sounds a lot better than a $3.50 discount. 

However, be wary, as too many discounts can really start to eat into your back pocket. The more customers use monetary-based deals, the more they need and expect them to buy from you again. If you find your customers are waiting for price discounts to make a purchase, that may say a few things:

  • Your pricing is too high
  • You’re targeting the wrong customers (they’re too price-sensitive)
  • Your pricing model is wrong

Like all things pricing, experiment and see what works best for your customer, your product and your brand.

Brand advocacy & referrals

It’s hard to lump brand advocacy and referral marketing under the same umbrella, but the two concepts are similar. 

Incentivise past-buyers to spread your brand’s name. 

This can be by paying them a certain percentage of every sale they generate (a referral program) or a dollar value into a virtual wallet for every customer they refer. 

Building brand advocacy is the hardest part, and, when done correctly, you can argue that brand advocates shouldn’t have to be incentivised to spread your brand’s name. That being said, giving a customer a reason to spread the word of your quality product never hurts. 

When past buyers do speak positively in public about your brand, it’s essential to recognize and possibly engage with it using social media listening and monitoring. This not only helps customers connect with your brand, but builds an engaging and proactive image for your brand. 

Increase exclusivity

Remember the last time you held something special, like, genuinely remarkable? Whether it was an ornate piece of jewellery, a rare fossil or some part of history, you know you were holding something exclusive. 

That doesn’t mean your ecommerce store should start selling dinosaur fossils, but selling something hard to get is a potent way to generate engagement. 

This concept works wonders for brands that implement luxury pricing. 

Early access to a new product or exclusive access to a product that’s only available to past customers can see them reengaged with your brand. The ‘trick’ is to market this exclusive product to everyone while only making it available to past buyers. Increase exclusivity by launching a presale list and having limited availability. 

Final tip: measure, test & assess

While the information you’ve just read is no doubt going to be beneficial to your customer retention, these ideas need to be tailored for your specific brand. If you’re selling men’s socks at the lowest possible price, adding value in the form of an unboxing experience mightn’t work for you. 

What will help fast track you to the most successful retention marketing strategies is adapting what’s here to fit your brand. Then, measuring its effectiveness, testing alternative methods, and then assessing it all. In the world of digital (retention) marketing, it’s only data that can point you in the right direction.

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Phil is a bearded Australian living and working in Warsaw, Poland. When he's not working on taking Packhelp to the world, he can be found trying not to kill his plants or writing for his personal blog expatspoland.com

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