Did you ever think why repeat customers are responsible for 40% of store revenue? Here another mind-blowing factor for you, 40% of the overall profit will be generated by only 8% of customers who are most loyal towards your business. B2B Marketing Trends in 2021
Now, a question for you, in this scenario, why many brands are focusing more on customer acquisition? Just think once. Many brands are spending several dollars each month on Google Adwords, Facebook, Instagram, etc.
Successful brands have given most priority for making customer retention. Because brands know that customers who already visited the store will make them sustainable, and a thriving business. Also, creating exclusive retention marketing strategies will helps you to increase your sales.
What is retention marketing?
Retention marketing, the name sounds like a buzzword. But it is imperative to make growth and sustainability of every ecommerce business.
In simple words, retention marketing means focusing on the existing customers who purchase already from the store. Retention marketing mainly helps to make repeat purchases from existing customers more frequently, and with enormous order value, it will maximize your customers’ lifetime value too.
Customer retention marketing is the only one-stop ecommerce strategy. Customer retention, an essential component and why late, let’s get into why customer retention marketing should have a critical focus.
Why businesses need retention marketing?
You may think that yours is a profitable business, and there is no need to worry about making shoppers return to my website again. But, question yourself why wouldn’t you take advantage of this immense opportunity.
New customer acquisition getting more expensive day by day. In the past five years, CAC (Central Attribution Committee) for B2B and B2C brands have risen to almost 50% and paid CAC is higher than organic CAC even now also. Organic costs are rising to high costs with a high faster rate where customer retention rates fall on these costs. It’s the most critical reason why retention has such focus on any business.
Why customer retention matters to business:
1. It’s cheaper to get repeat customers comparing to new ones:
Just remember a simple fact, think once about the money you invest for driving shoppers to your site. Even though if your retention marketing strategy works, There is no assurance whether customer purchases on your site or not.
In fact, existing customers will have a high conversation rate. It’s predicted to have 9 times more for existing customers to complete a purchase than the new one.
As customer acquisition costs rise, you need to compete more and more with your competitors for ad space due to continuous growth in the ecommerce ecosystem.
2. Repeat customers seek for little product information:
Just reminding you that your existing customers already know who you are and how awesome you will be. But, new customers who visit for the first time may take some time or may not be ready to commit first sight. They think many times to complete a purchase as they take some time to compare prices, read reviews, and many aspects.
Returning customers have gone through the consideration and onboarding process; also, the trust you create to your customers to sell a top-quality product. For instance, let us think you have a skincare line, and your customers are very impressed by your face scrub, they come back again to your site to purchase for a moisturizer or a toner.
3. Repeat customers are genuine and loyal:
You keep one or two stores in mind for each of your needs like clothing, beauty or skincare, home needs, etc. You are spending a fair amount at each store for your needs. Precisely, in the same way, your shoppers will be.
Based on the recent research, it’s predicted that your loyal top 10% will spend more than 3 times per order than lower 90% of your customers where top 1% of your customers spends 5 times more than the lower 99%.
A loyal customer helps to create more customers. These loyal customers are the ones who show their love towards your products and will share with their friends, family and it is the best advertising for your products.
Four Questions to understand retention:
Here are the 4 questions for you to understand where you stack up to about customer retention. Here are the questions you must ask you, and let’s go into more in-depth.
1. Why customers are not purchasing my products:
It’s a known fact that no one will like to see their customers’ needs or intention. You invest time and money for making the purchase and then later everything goes to toss. You will never hear from them in future.
There are numerous reasons why customers are not purchasing your products, but most probably, it’s essential to know the issue where exactly you are lacking. For instance, maybe your customers found the same product at a low price on another site.
There are many brands in the market where they will be able to undercut you on price. Here comes how critical it is to build brand loyalty. Customers won’t think of cost, and they will continue to shop on your site and purchase your products they like most. Just have a look at your post-purchase workflow what you need to do to make your customers purchase. Question yourself, whether you are sending any simple confirmation to the orders placed by your customers. Post-purchase email workflows, offers and updates of your products can make or break your customer retention.
2. How many users will leave a website?
Calculate how many users are purchasing out of a total number of visitors who comes to your store daily or monthly. It’s a shocking fact that the average conversion rate for ecommerce sites is just 2%. It doesn’t mean that you need to accept the reality as it’s the industry average.
Remember one thing that not everyone will convert as a customer for the first time they visit your site. But, focus on the ways to increase the conversion rate. Due to this reason, it isn’t easy to know and save your visitors email address with the help of pop-ups or other displays on your sites. So, follow up them if they leave your site without purchasing and drive urgency to buy. For instance, you may come up with a limited time period strategy which expires after some time.
3. What’s your repeat customers vs new customers onsite experience:
The influential marketing messages will be hyper-relevant for individual shoppers. In today’s world, customers are expecting to have a personalized experience. We have already discussed the importance of capturing your customer’s email, but it won’t be very good if you already have theirs if you ask them again. Instead, try to use welcome back messages in order to welcome your repeat customers on your pop-ups and leave the email form here.
4. Are your customers feeling an emotional connection with your brand?
As we discussed previously, many other brands in the market undercut you on price, fast shipping, or any other unique and appealing factors. The gap here can be built through personalized messages both via email and onsite, use rewards programs, and make your customers know about the upcoming products or sales updates.
How can you calculate customer retention?
Now, you came to know how necessary customer retention is. Here, let’s discuss how to calculate whether your efforts are paying off or not. You can learn here everything about how to estimate these metrics.
1. What information you need?
Think about what information you need to calculate customer retention. Choose a time period, a more extended time period like a quarter to estimate the measurement most accurately. Now, think how many customers have visited at the start of the time period, end of the time period, and how many new customers have visited during that period.
2. What’s the formula to calculate customer retention?
The formula to calculate customer retention is simple and straightforward. The formula is the customers you had at the end of the time period minus customers you got during that time period divided by the number of customers you had at the start of the time period.
Now, multiply the number obtained with 100, you will have the percentage of retained customers. Let’s discuss with an example, think you started with 100 customers and 15 new customers have visited your site. In the end, there are 105 customers, and the formula looks like:
((105-15)/100)*100=90% retention rate
It’s an awesome figure but try to get a 100% retention rate always.
What are retention marketing strategies?
You all get to know how to calculate retention rate now. Here, let’s discuss the strategies of retention marketing to boost the number. It can be done by connecting emotionally with customers and getting smarter about marketing.
1. Know your customers completely:
Remember once how meaningful customer relationships are? Try to know all the information about your customers like email, birthday, gender, color preference, and several orders. You can capture the data from both explicitly from fields or implicitly like hidden fields.
Here comes the most crucial factor, usage of that information to create personalized messages. For instance, Monica and Andy capture the data like where their customers are in their pregnancy time. Now, brands will send their customers custom based content based on the customer profile.
2. Send follow-up emails:
Do you think it’s the end of the journey if a customer makes a purchase? No, you need to send follow-up emails to them in order to express your gratitude. Don’t forget to utilize the opportunity to ask the feedback or a customer review. Also, show other products which they love most.
Please send emails to your loyal customers to let them know about upcoming product launches, sales, special offers and many appealing factors. If you do this email communication, it helps you stay top of mind for your customers.
3. Provide some personalized discounts:
Personalization is an essential factor. Do you ever think to use the information you know about your customers to personalize the discounts? For sample, you can send your customers a special congrats message and offer discounts if you know their essential dates like birthday, anniversary, or baby due date, etc. You can build long-lasting relations with the help of this strategy.
4. Provide effective customer service:
Maybe your product is incredible and has the smartest marketing globally, and has terrible customer service then it affects very badly on your brand, and the words can spread more quickly than expected.
Create a memorable customer service experience to your customers through live chat and email support. According to the recent study, it’s found that 48% of users seek to interact in the way they like most which is the most important factor to make a personalized customer experience.
5. Conduct loyalty programs:
You can conduct a customer loyalty program that helps to gain customer loyalty by providing rewards to your customers which supports your business to market products and services. You can give discounts, bonuses, free merchandise, some coupons, or else can provide access to unreleased products.
You can’t imagine how well loyalty programs work for your brand. It helps for those who offer discounts or brands who will have more competitors in the same market. If you provide rewards for your customers, it will make you stand ahead of your competitors. It also helps to improve the lifetime value of each of your customers.
To wrap it up:
It’s necessary for ecommerce brands to have customer retention marketing and don’t leave it optional. If you spend just half time and energy on your existing customers compared to acquiring new customers, your sales will increase like a rocket. You can’t imagine your revenue with these retention marketing strategies.