The Secret to Making More Money With E-Commerce: Customer Retention, Part 1
In 2019, online retail sales surpassed $3.5 trillion worldwide, but the e-commerce boom was just getting started. With COVID-19 keeping everyone home, and brands pivoting operations to sell online, the events of 2020 created a unique ecosystem for the online marketplace to explode.
This shift in consumer behavior, combined with the technology available today, make it easier than ever for brands to create an online store — and gives consumers options to shop wherever they want. That makes customer acquisition extremely important for continued growth. However, many organizations oversteer in this direction while overlooking their greatest asset: returning customers.
Why Customer Retention?
Industry data continues to prove how lucrative customer retention can be. Even just increasing retention by 5 percent can translate to a 75 percent increase in profits.
However, the pandemic’s shift to online everything has also given consumers more purchasing power when selecting who wins their business. One upside is that most customers have recency bias and tend to stick with companies they know. Once they’re hooked, it generally costs five times less to encourage them to make a repeat purchase than to attract a new customer. They also spend more than first-time buyers.
However, earning repeat business is only one part of developing a successful retention strategy. Ultimately, the end goal is to build an active and loyal customer base to successfully leverage this audience as a marketing tool for brand awareness.
These loyal, repeat customers are one of the greatest assets for business owners. There are several retention marketing strategies to help earn their ongoing support.
Get to Know Your Customers
COVID-19 has also changed shopper expectations, and small business leaders should start digging into what those look like if they hope to deliver a memorable experience. For example, 40 percent of consumers would like to see local restaurants begin offering outdoor dinner-and-a-movie packages on a regular basis, and 21 percent enjoy curbside pickup so much that they expect it to remain an option after the pandemic subsides.
This type of customer feedback is incredibly valuable because it provides direct insight into what customers and prospects are most interested in, as well as their triggers for purchasing. Small businesses can use tools like surveys to learn what matters most to their unique audience and begin to think about new ways to deliver that value to them. When done effectively, it’s much more likely that these customers will remain loyal to the business for years to come.
Don’t Forget the Basics
While customer feedback is useful for identifying new areas to improve the shopping experience, it’s important to lay the groundwork for that experience first. A fast, intuitive and mobile-responsive website remains one of the most critical characteristics of a successful business, and it’s something both new and returning customers expect. Research shows an extra five seconds of wait time can lead to at least a 20 percent drop in shopper retention.
Additionally, reliable and helpful customer service ranks high when customers evaluate the shopping experience. Support can be its own acquisition channel, as consumers often choose their favorite brands based on which helps them the most when they're in need. Small businesses that remove as much friction as possible from this process will not only see happier customers, but they'll likely retain those shoppers as well.
While these suggestions might sound obvious to some, it’s important to never overlook the basics before setting your sights on the next area of opportunity.
Proactively Engage With Email Marketing
Email marketing is a powerful tool small businesses can use to reach all their customers at once, and often the best use case for it is cultivating customer relationships over time.
Customers who have opted into an email list not only want to receive communications from their favorite brands, but they're also more engaged with the content that they receive. Providing this captive audience with helpful and interesting content regularly is a terrific way to nurture their experience and improve retention.
Once customers opt in, start with an automated email welcoming them to the community and highlighting the value they can expect to gain by subscribing. Once this relationship grows, and you have more insight on their shopping behavior, use data from past purchases to recommend new products or services they might enjoy.
Email marketing offers endless ways to proactively connect with your audience and engage with them away from your website. From distributing feedback surveys to announcing special promotions and offers, you can use these communications to help build a community and cultivate customer loyalty.
The Secret is Out
If you want to make more money with e-commerce, focus on existing customers. Give them more of what they want, create a great experience, and build those relationships with email.
There's no one-size-fits-all approach to retention marketing. In part two of this series, I’ll explore several more strategies and how to determine which ones make sense for your business.
Dave Charest is the director of content marketing at Constant Contact, an email marketing software provider.
Related story: Why Personalization is the Linchpin for Retailer Success