In the current age of Big Data, businesses have a wealth of customer information at their fingertips and it is this data that goes into maintaining, personalising and enhancing customer relations. Retaining customers and maintaining customer loyalty is challenging in a booming ecommerce market. Customers have a number of options open to them, which is why spoiling them a little can go a long way to keeping them coming back. It’s well known that acquiring new customers costs more than retaining existing ones, anywhere between 4 to 7 times more, and 67% of marketers agreed that customer acquisition is more challenging than retention (Forrester Consulting). There are plenty of innovative tactics and some old favourites for boosting customer retention and finding the right ones to suit your business, or even better, the strategies that will suit your customers, is crucial.
Before you can even start thinking about different retention strategies, it’s essential to have a good customer relations management (CRM) solution, in order manage the data you collect. Gathering and analysing big data gives a historical view of a customer’s entire experience with your business. You can then segment your customer base to target specific groups and better anticipate customer needs. Your CRM should capture customer’s buying history and patterns, important dates, interests, their reactivity to your newsletters, promotions, etc. By analysing your customer’s relationship with your business you can tailor your offers, establish which products to promote and the best time to do so. RFM (Recency, Frequency and Monetary Value) is a great tool for identifying and segmenting your customers based on their purchasing behaviour. By evaluating and segmenting your customer base you can target the right groups with appropriate offers, reward your most loyal customers and re-engage with lapsed customers. For example, instead of wasting energy encouraging one time buyers to sign up to loyalty programs, you’re better off sending this type of offer to repeat buyers. The Pareto principle, applied to your customer base, means that 80% of your sales will probably come from 20% of your existing customers. It makes sense to understand the characteristics and preferences of your best customers, to keep them happy and to target others customers with similar profiles. One thing to bear in mind with retention strategies is that not all customers will be the right fit for your company. Not all customers are good for your business, so make sure you’re putting the energy and resources into those that are.
Once you’ve analysed and segmented your customer base you can start to focus you on the appropriate types of retention strategies for your different customer groups. A very different form of data worth collecting are customer reviews! Encouraging customers to leave reviews has multiple benefits. The more customer reviews you have the more trustworthy your site appears to new visitors and according to a study by PeopleClaim, 71% of eshoppers read reviews before buying! You also give your SEO a boost as reviews add new content to your site, keeping it fresh and in the search engines sights. In terms of retention and loyalty, giving your customers the opportunity to share their buying experience shows that their satisfaction and custom is important to you. You’re also gaining further insight into what makes your customer’s happy and, in the case of a negative review, what you can improve on. A study, by Search Engine Land, showed that 72% of consumers trust online reviews as much as personal recommendations.
Recommendations and referrals lead us to loyalty programs, an excellent way of boosting customer retention. When you are ‘earning’ points or working towards a free product or extra service, it’s a lot harder to go to a competitor as you feel like you’re losing out on that prize that awaits! You can reward a variety of customer actions with ecommerce loyalty programs, sharing your content on social media, referrals, leaving reviews, repeat buys, buys for friends and so on.
Email is an old favourite for customer retention. It was ranked as the best marketing channel, in terms of return on investment, according to a study by Econsultancy and Adestra, with 68% of companies rating the channel as ‘good’ or ‘excellent.’ You can really target your different customer segments, offering exclusive deals, limited-time and stock offers, personalised campaigns that will appeal specifically to a certain segment. A study by Aberdeen Group showed that 75% of consumers appreciate brands that personalise their offers and messages. Newsletters can be used to add a more personal brand message, less sales, but more information about who you are and your company ethos. Customers who appreciate your approach are more likely to remember and recommend your company.
Retargeting emails are also a retention must, they can be automated to reach out to your customers at various stages in their lifecycle. Retargeting emails are effective at reducing cart abandonment rates as nearly half (44.1%) of cart abandonment emails are opened and nearly a third (29.9%) of clicks lead to a purchase back on site (SaleCycle). Automating these kind of emails, saves you time that you can put back into your business.
There are a whole host of retention strategies to test once you have the basics underway and as the ecommerce market grows, so does the competition and the cost of customer acquisition and retention. By focusing on retention, rather than constantly chasing new clients, your business will be sustainable and profitable. If you keep your CRM up to date and accessible to everyone in your team, you’re giving everyone the information needed to deal personally and professionally with your customers. How you treat your customers keeps them coming back, like any relationship, respect, care, personal details and a great product or service will secure the right customers for your business.
By Marc Schillaci, CEO and Founder of Actinic (Part of the Oxatis Group)