E-Commerce Customer Retention Strategies to Improve Your Customers’ Lives

The old adage goes ‘it costs more to add a new customer than it costs to retain an old one.’ As much as I hate cliches, I must admit the value of this particular one. Those with experience in sales and finance know intimately about the cost-benefit relationship of adding new customers versus retaining existing ones, and the data backs up the conventional thinking. According to Amy Gallo of the Harvard Business Review, it can cost 5-25 times more to acquire a new customer than it costs to retain an old one depending on the industry you work in. What’s more, the rates at which customers churn your business also provides an indication as to the health of your sales strategy and customer relationship management.

So what are the ways a company can retain customers, especially within the eCommerce space? Furthermore, how can you harness your customer churn data early to reduce drop rates in the near future? In this blog we will look at ways to get on customer relationships early to set your eCommerce business up for long-term success.

Customer Retention by the Numbers

A good customer experience is always more valuable than a small lost investment. For example, a customer satisfied with a returned product (whether you give the customer a refund, store credit, or so forth) will allow you to retain up to 84% of customers that would have left over a poor experience. Yes, you may lose a small amount on lost or returned inventory, but that amount pales in comparison to losing a large segment of your customer base.
To look at customer retention and net profits more broadly, consider data presented by Fred Reichheld from Bain & Company, Inc. In his study on cutting costs, he noted that a mere 5% increase in customer retention can yield a 25% – 95% increase in profits. In the case of an eCommerce business, reducing costs and upping profits figures centrally to the business’s success.

However, eCommerce businesses face a precarious situation with customer retention, given that online shoppers have very few means of interacting with an eCommerce business outside of browsing and purchasing. Therefore, reducing churn rates and finding out-of-the-box ways to build a loyal customer base becomes especially important to any company in the eCommerce industry. So what are some ways an eCommerce business can drive brand loyalty?

Strategies to Drive eCommerce Brand Loyalty and Reduce Churn Rates

There are endless, creative ways to keep your best leads, your most interested customers, engaged. We will discuss a few here, but by no means are these the only options available to an eCommerce business. Every company has ups and downs in sales performance, but those that prioritize customer relations can more reliably get through turbulent moments in the market.

Incorporate tools to connect with customers.

For a thriving eCommerce business, connecting with customers must remain top of mind. When you build an emotional connection with a customer, your customer lifetime values can increase close to five-fold. On the other hand, if you de-prioritize customer satisfaction, you could adversely affect your churn rates, leading to more customers dropping your eCommerce business. In a worst-case scenario, you could even alienate customers from a loyal segment of your audience. To connect with customers, you can utilize a range of tools including promotional emails and pertinent platform updates

Make customer service and experience a top priority.

The benefits of nurturing return business for eCommerce include low costs and higher revenue. One way to nurture your existing business is to take time to analyze customer data to put email personalization and list segmentation strategies in place. Find trends in your most loyal audience. You can use data-modeling to predict trends and actions among this loyal audience.

Send customer-specific emails with promotional offers and related products

In the process of reducing churn rates and bolstering brand loyalty, you might use the data you have on existing customers to send personally-tailored emails. For example, if a user has visited your eCommerce platform and left something in the cart, you can send a reminder email a day later to keep your platform on top of mind for them. Let’s say a user actually buys something from your platform – within 24–48 hours afterwards you can send an email showcasing related products. Whatever you choose to include in your promotional or reminder emails, be sure that it is customer specific based on the customer data and the segment that you have put him, her or them into.

Monitor Churn Rates and Strategize Against Them


Calculating churn can be simple. The most common formula is this one:


Total number of customers who left your business (during the period)
________________________________________________________               = CHURN
Total number of customers at the beginning of the period


A healthy churn rate is 5% or below, though this figure may change based on the specifics of your business. Keep in mind this formula can only calculate churn in the past. To predict future churn, you must use sophisticated modeling tools to take your existing churn data and extrapolate for a future period (the number-crunchers on your team can help you with this modeling).

It’s easy to see why an eCommerce company would avoid looking at their churn rates – it’s hard to put a positive spin on customers dropping your business. However, as Gallo notes in her piece on customer retention, “Looking at churn rates by customer segment illuminates which types of customers are at risk and which may require an intervention.” Rather than seeing a churn rate as an unpleasant marker of failure, you can embrace your churn numbers and use them to prevent at-risk segments of your client base from dropping your business.

One way to harness the informative power of your churn data is to look at your customer base in demographic segments. How is your eCommerce platform performing with users age 26-40, for example? Are there reasons you can discern from your churn numbers as to why they churn your platform?

Knowing why customers drop your service can be a great way to intervene on at-risk segments of your client base early, before they churn.

Introduce a Customer Loyalty Program

It’s just a statistical truism that companies who execute personalization strategies often exceed revenue goals. One such personalization strategy is to create a customer rewards program that rewards return-business. Think about your favorite morning cafe or coffee shop with a punch-card rewards program.

Aren’t you more likely to visit a cafe every day if you know each purchase will help lead to a free drink or sandwich?

You can apply the same conventional wisdom to an eCommerce business. Even if you have to give away a free product every once in a while, the cost of keeping a customer is much lower than that of trying to lure in a new customer.

The Final Word?
You may find all this data-analysis daunting. No worries – so do all of us who are not experts in data-analysis. One way to build an eCommerce retention strategy is to partner with a software development company with expertise in eCommerce, like OpenSource Technologies. Together, you can analyze your eCommerce user data, determine where your customer base wants to see improvements, and find the best channels and methods for segmenting and personalizing your customer-outreach. And finally, keeping your customers happy makes their lives better, and positively contributes to your ROI.

Let us help you think outside the box about how your eCommerce platform can reach your customer base.

TAGS : app development companies, Ecommerce development

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