Customer Retention: For Online Stores
Your best customers aren't one-time buyers or users of your services. They come returning for more time and time again. Customer retention raises the lifetime value of your customers and increases your revenue. It also aids in the development of fantastic customer relationships. You aren't just another store or website. They trust you with their money because you provide them with something of worth in return.
What does it mean? How can you use relationship-building methods to keep your customers?
Let's take a closer look at these ideas and look at some instances that you may use in your own business.
What does customer retention mean?
In marketing, customer retention is defined as the process of persuading existing consumers to buy more products or services from your company. It differs from customer acquisition or lead generation in that the customer has previously been converted at least once.
The greatest customer retention strategies allow you to build long-term relationships with customers who will become brand loyal. They may even spread the news throughout their own circles of influence, making them brand ambassadors.
So, why customer retention is important for online businesses?
You may have heard that keeping clients is easier and less expensive than getting new ones. According to the latest recent statistics, this is correct. For starters, you'll save five times the amount of money on customer retention.
Furthermore, selling to an established customer is at least 40% more likely than converting someone who has never purchased from you before. Existing customers also spend 31% more than new leads, and loyal consumers are 50% more inclined to try a new product when it's released.
How to calculate customer retention
Customer retention rates can be calculated in a variety of ways. It depends on the time period you're looking at, but many marketers employ far too many factors.
Let's imagine you've acquired 3,000 new clients in the last two months. 1,500 of them return to buy something else from you throughout the same time period. These are the two figures you'll need to figure out your customer retention rate.
Let’s look at this formula:
Begin by subtracting the overall customer base at the conclusion of the calculation period from the number of customers obtained throughout the calculation period. Divide that figure by the number of consumers you had at the beginning of the time and multiply by 100.
Example:
At the start of a two-month calculation period, you have 50,000 consumers. You gain 1,000 customers in those two months, and by the conclusion of the period, you have 40,000 consumers.
To eliminate clients obtained during the testing period, we'll deduct 1,000 from the total of 50,000. That leaves us with a total of 49,000. We'll now divide 40,000 by 49,000 to arrive at. 81. When we multiply that amount by 100, we get an 81 percent client retention rate.
After you knew all of the above, how do you improve your customer retention?
Customer Retention Strategies
1. Map your customer journey
It's not always a direct line from prospect to customer. In fact, it's more likely to take a number of unexpected twists and turns. However, if you collect data on how consumers engage with your website and business, you may predict their customer path toward making a purchase.
Begin with the following questions:
How did people learn about your company?
Do people use Search Engines to look up your articles?
Is it true that they follow you on social media?
Do you get a lot of recommendations?
Then look at what makes your customers want to buy. Once you understand the customer journey, you can boost client retention by optimizing each stage.
2. Specify sales goals
Calculate your current client retention rate first. You must begin somewhere. Setting a goal of 50% customer retention isn't especially feasible if you're currently retaining 10% of your customers. You'll need a goal that you can realistically achieve.
Take into account the size of your customer base as well as the products you sell. Some products are specifically designed to keep customers coming back. People, for example, need to replenish their domestic goods such as dish soap and toilet paper on a regular basis. In that situation, you can set a more ambitious aim.
3. Value proposition
The importance of perceived worth is almost equal to that of actual value. Your customers must regard your company as the final answer to an issue. For example, for many businesses, corporate social responsibility has become a top priority. Green practices and community involvement do not add to a product's or service's actual value, but they do add to its perceived value. What you think and why you're in business should be reflected in your value proposition.
4. Engage with your customers
A connection deteriorates when you don't communicate with a friend or loved one for an extended length of time. It's becoming increasingly simple to avoid making contact. The same thing occurs with your clients. They won't even consider reading your latest posts or engaging with you on social media if you don't communicate with them.
5. Content, content, and content
Many individuals purchase items and services from firms that are eager to educate their customers. Your clients will return for more if you continuously publish outstanding content. Staying top-of-mind is a big part of this phenomenon. If your company comes to mind first when your industry is mentioned in a conversation, you're doing a fantastic job.
6. Ask for feedback
Asking for information about your clients' thoughts and feelings serves two purposes: it makes them feel good because you value their opinions, and it gives you insight into how they think and feel.
Boring surveys may not be the best option. You may send an email to all of your readers, asking them to respond with their comments. Instead of ranking assertions from one to ten, encourage participants to provide detailed responses.
7. Provide customers a Referral Program
Customer retention is important not just for maximizing the value of existing customers, but can also aid in the acquisition of new consumers. According to research, 75% of customers distrust commercials, whereas 92% believe recommendations from friends and family. As a result, customer retention techniques can turn your existing loyal consumers into brand advocates, allowing you to gain more new customers at a reduced cost per acquisition.
The best way to do this is to ask your happy customers to refer their friends, family, and coworkers to you through a referral programme. While the primary goal of a referral program is to boost customer acquisition, the act of referring a friend is likely to increase client retention for both intrinsic and extrinsic reasons.
Referral benefits that are payable on a future purchase, such as shop credit, a gift card, a discount on the next purchase, or the awarding of loyalty points, can boost loyalty and lead to repeat purchases. Referrals are particularly crucial for businesses that don't have many prospects for repeat business from the same consumer. Consider a corporation that makes and sells high-ticket items such as refrigerators, dishwashers, and dryers. As a result, encouraging satisfied consumers to promote the company to their friends and family opens up a new avenue for new business.
Acquire high-value clients at a low cost, increase retention and grow revenue through a targeted referral program.