Others say it is five times more expensive for a company to acquire a new client than to keep an existing customer. Some people say that maintaining customers is seven times more valuable. Finally, “Acquiring new customers is anywhere between five and 25 times more costly than keeping an existing customer.”
The exact figures may not be as precise as they should be. It is important to remember that customer retention costs less, is more profitable, and is more accessible in many ways than customer acquisition.
What is customer retention? Customer Retention Definition
Customer retention or client retention is the process that turns one-time customers into repeat buyers.
The word “retention,” which comes from the word retain, is a fancy term for keeping.
The goal of customer retention is to retain your existing customers.
Industry-specific goals and strategies for customer retention will vary. A high-end software company may have different methods than an online store.
For all sectors, it is essential to maintain a high level of service and quality that will keep customers returning. This is customer retention at its best.
What are Customer Retention Programmes?
Customer retention programs are activities and tactics that brands use to enhance the customer experience.
These programs encourage repeat purchases and promote a brand’s product or service.
We’ll limit our focus to strategies specifically designed for ecommerce store owners like you.
Here are some customer retention strategies that will give your customers an incentive, the opportunity, and the desire to return to your store to make another purchase.
Why is customer retention necessary?
Customer retention is essential for many reasons, including that acquiring new clients costs more than retaining existing ones.
Returning customers tend to be 50% more likely than new ones to buy from you and spend an average of 33 percent more. It’s not only cheaper to retain your customers but also more profitable.
Retaining customers can help you reduce your marketing expenses. Happy customers will return to your business and tell others about it. Word-of-mouth advertising can drive up to 5 times the sales of paid advertising.
Your advertising costs will decrease, and you’ll save money.
You wish to be something other than a startup that is only a flash in the pan. You want organic growth to ensure future revenue.
Benefits of Customer Retention
Here are some immediate benefits of implementing customer retention strategies:
Harvard says that a five percent increase in retention will increase profits between 25 and 95 percent.
Increases brand awareness by word-of-mouth advertising from loyal customers.
You can build relationships constructively with your customers.
You can identify and correct flaws if you listen to and receive customer feedback.
According to studies, loyal customers are six times more likely to experiment with new products. According to studies, six times are more likely.
If you feel loyal to your customers, they will be more forgiving. This means that there are fewer angry customers.
Customer Retention Metrics and How to Calculate It
Before creating a plan, you need to understand and know your current retention rate. This number shows you what percentage of your customers are still with you.
You can easily calculate your customer retention rate using the following equation.
First, determine the time frame. You can choose the monthly, quarterly, or yearly timeframe – whichever works best for your business.
Remember to include the churn rate when calculating the number of clients at the end.
As an example, you have 10,000 customers when the period begins. You gained 5,500 new clients during this time but lost 2,500 because of churn. This means you will have 13,000 clients at the end.
Why is this number significant? This number tells you if you can keep your customers returning for more. As a benchmark, it has been reported a 35 percent retention rate or higher in the SaaS or ecommerce industries indicates you are doing well.
Best Practices for Customer Retention
There are many ways to implement customer retention marketing. Here are some of the best ways to increase your customer retention rates.
Be realistic about your expectations
It’s essential to set realistic expectations if you want to increase your customer retention rates. This can have a significant impact on the ability of your business to retain customers.
Consider delivery times. Regarding shipping, most online stores cannot compete with Amazon. You can, however, work to inform your customers.
Imagine that you have a client who has ordered something but then must wait for it to arrive. It can be one of two things:
The package has yet to reach them, and they are increasingly frustrated.
The two-week delay was in line with what they expected, so there’s no issue.
We want to create this second scenario if the goal is to keep customers.
There are many simple strategies to help you retain customers.
Transparency in shipping information is possible on your website. You can send customers emails informing them that the order has been received, is being processed, and has shipped.
Shopify’s backend allows you to customize the notifications sent to your customers.
Setting expectations extends beyond shipping.
Be sure to check your product descriptions. Be sure that there are no surprises at the checkout. It’s essential to set clear expectations. This is an easy but crucial step that will help you improve customer retention.
Create a Loyalty Programme
Your customer retention strategy should include a loyalty program. These programs give your customers incentives to return and shop with you.
Make your customers feel special once they have opted into your loyalty program. Offer them exclusive deals and sneak peeks at new products. This royal treatment makes your customers feel appreciated and is at the core of this strategy to retain them.
Sephora’s Beauty Insider program is an excellent example of this tactic. The program allows you to receive discounts and gifts without spending money. The more you spend, the greater the rewards.
You can give benefits similar to a loyalty program even before someone has opted in. You can, for example, offer a discount code to each customer in their order confirmation emails.
Wait to make them sign anything up – give them the discount immediately.
You can improve customer retention and loyalty by offering customers value after purchasing.
Shopify allows you to customize your order confirmation emails and create discount codes to boost customer retention.
