Customer retention is a company's ability to keep its paying customers over time. This is achieved by creating a relationship between the brand and its customers.
New brands mostly focus on customer acquisition (new customers), which makes sense, since they are yet to have an existing customer base to build on. However, once a brand starts growing, it will quickly need to start focusing on customer retention, as well as acquisition, in order to maximize its revenue and keep afloat.
Not focusing on customer retention and loyalty is basically leaving money on the table, considering that acquiring a new customer can be up to 5 times more expensive than reconverting a returning customer.
Your loyal customers are your business's most prized asset- and they will not just appear out of thin air, creating loyal customers requires care and attention.
So what are our 6 strategies to increase customer loyalty and retention?
1. Amazing customer service
Customer service can have a big effect on a brand's ability to keep its customers, and not necessarily for the reason you think. Customer service is more likely to hurt your retention efforts than help them.
A Harvard review from 2010 shows that while customer service has a relatively low effect on increasing customer loyalty, it has a high effect on losing customer loyalty, when it is not good enough.
What makes customer service good? It's simple: make customers' lives easier and remove obstacles.
You don't need to go out of your way to surprise and delight your customers, what you need to do is give them what they're looking for, and fast.
Have a good self-service option
A lot of companies put off automating their customer support for fear of losing their personal touch and alienating their customers.
A personal touch is important when communicating with your customers, but you also need to remember that millennials don't necessarily want to communicate with a person- most of them would much rather press a button and have their issue taken care of.
Chatbots are all the rage today, and for good reason. With a good self-service bot you can give your customers answers quickly and without the need to wait for a human representative.
Human representative easy to reach
There are 2 types of customers contacting support: the "self-sufficient" one, and the "I need help" one.
We need to make sure that our customer service fits the needs of both of these types of clients, and to acknowledge that our chatbot probably doesn't have all the answers, even for the "self-sufficient" customer.
One of the most annoying things, as a customer, is having to go through a long never-ending string of questions, just to get the option to reach a human representative. And sometimes even at the end of that impossible process, you have to wait online some more, until a representative is available.
Chatbots are there to improve customer service and shorten waiting times- if 2 out of 3 customers get their needs met automatically, the third one will not have to wait for a human representative for too long.
So make sure not to exhaust your customers with automation- give them the option to, at any time, switch to human support, easily and quickly.
Be proactive
Solving an issue for your customer is ok, but it would be better to completely avoid this issue in the first place, wouldn't it?
Customer support centers are an amazing resource for companies to improve. By talking to customers and hearing their pain points, customer representatives have important insights on how to improve customer satisfaction, that the people in charge of business development might not be aware of.
Whatever it's because of a disconnect between these two tiers in big companies, or an afterthought for a smaller merchant, a lot of the times companies would solve the issue for one specific customer and not do the work necessary to solve the issue globally.
A customer encountering the same issue on his second purchase in your store would likely feel frustrated, and might even abandon his purchase. So recurring problems are not only wasteful of your support rep's time, but also hurtful for your customer retention efforts.
Be proactive and solve issues you find before the next customer experiences them. But we have to acknowledge that no business will ever be complaint free, so it's important to note that 95% of complaining customers are likely to purchase with you again if the problem is solved in their favor.
2. Loyalty & reward programs
Just as you would give away discounts and benefits to acquiring new customers, you should offer benefits to returning customers and encourage them to purchase again, which is exactly what loyalty programs do.
Did you know that 74% of customers are said to choose a store based on a strong loyalty or discount program?
There are a lot of different loyalty programs types, from scratching cards you get in fro-yo shops to a points system that rewards you for different actions in the store. You can test each and choose which one is the best fit for you and your customers, but whichever one you choose, there are some key principals to take into consideration.
According to a report by Kobie Marketing:
45% of Millennials don’t join a loyalty program because it requires too many purchases to earn rewards
39% of Millennials don’t join a loyalty program because they would have to pay some kind of fee
34% of Millennials don’t join a loyalty program because the enrollment process is too long
Make it simple & easy
Don't put obstacles in your customers' way when trying to sign up for your rewards program.
You want them to sign up and start earning rewards by completing the actions you set up.
So make sign up easy and simple, without requiring unnecessary details. If you can, even make the sign-up for the program automatic with purchase.
Make it free
Unless you are a big brand offering extremely valuable and desirable benefits, there is no reason to expect your customers to pay for the rewards program.
The loyalty program is not a product your customers are purchasing- it is an incentive for them to make more purchases at your store.
What is the incentive to pay for the program? If you can't answer that question, it needs to be free.
Make it fun
Make sure that your customers actually have fun taking part in your rewards/loyalty program- it does not need to be something difficult and overbearing.
One great way to make the rewards program fun is with gamification- compare their status to other customers, use colors, community, and competitions to make the whole thing feel like a game.
Make it worthwhile
Your customer should actually want to take part in your rewards program. While making it fun is important to keep them engaged, the only thing that will make them want to take part in the first place is a tempting reward.
To really lower resistance for entrance to the program, you could offer free points, discount or cashback for signing up.
3. Use your thank you page
A lot of online stores don't utilize their thank you page beyond thanking the customers and giving some basic shipping information and order summary. We treat the thank you page as the end of the transaction between us and the customers- the exit door from our store. But viewing the thank you page in that way is not only a mistake, it is also costing you amazing customer retention potential.
Using your thank you page, you can re-engage customers with your store post-purchase, and turn first-time customers to returning ones before they even leave your store. There are three main psychological triggers that you can use to improve customer retention through your thank you page:
The foot in the door technique
Based on the psychological successive approximations principal- this means that after someone complied with a small request you asked of them, they are more likely to comply with a larger one.
One of the reasons this technique works is the gradual building of rapport with the other person- you ask for the larger thing only after he feels committed to you, by agreeing to the simpler one.
So imagine what you could ask from someone who just complied with purchasing from your store- a rather large request on its own. After making a purchase, a small request like sharing on social media or subscribing to a distribution list would be an easy one to comply with.
Choice supportive bias
This psychological principal refers to our tendency as humans to defend past decisions and rationalize them to ourselves, even when it doesn't really make sense. This bias makes us associate negative attributes to the option we did not choose, while assigning positive ones to the option we did choose.
So how can we use it on the thank you page? By making our customers feel good about the decision they made, to purchase from our store. You can that by displaying testimonials about your store and products, include a video showing the customer how to use the product and its benefits, and re-establish yourself as an authority with blog post extract.
There are plenty of ways to re-affirm your customers' choice to purchase from you, just choose the ones most suited.
Status quo bias
The status quo bias is our tendency to prefer the familiar, and see the potential loss of change as larder than the gain. This bias is what makes us repeat the same decision, stick to a routine and generally keep the status quo.
This psychological trigger can be used in the thank you page by getting to know customers so that you can later personalize your communication with them, remind them what they stand to gain by staying with you (like discounts and promotions), and what they stand to lose if they don't.
There are plenty of reasons and ways to use the thank you page in your customer retention efforts, if you want to get some ideas, check out our article on the subject. You could do all of these things with our amazing Shopify app ReConvert.
4. Subscription business module
Subscription models are one of the most powerful ways to take your retention rate to the next level- it basically allows you to reap the benefits of repeating customers, without repeating the promotional effort.
The subscription e-commerce market has grown by more than 100% percent a year over the past five years, with more and more retailers recognizing the potential in this model and jumping on the wagon. The downside of this model is that acquiring a customer is more difficult, while the upside is that once you have acquired the customer, you don't have to spend efforts on re-converting him.
You could use a subscription model as part of your eCommerce array of services in one of two ways:
Re-stock subscription model
This is best suited for products that are repeatedly bought, like makeup, food, cleaning supplies etc.
The idea behind the re-stock model is to give loyal customers, who know what products they want and like on a regular basis, to purchase a subscription, ensuring they will get their favorite products in an agreed upon interval, preferably just before the one they have is just about to run out.
You would usually offer a discount on the products in this subscription box- so that a customer buying the product once with pay full price, and a customer that is subscribed gets a discount for his loyalty and commitment to purchase repeatedly.
Surprise subscription model
This is the model that fits stores selling products that are normally bought once, and not re-stocked every set interval, like clothing, fitness equipment, electronics, etc.
But even if you are selling a product that is not re-stock-able, you can still offer your customers a subscription plan, that focuses on allowing the customer to experience and try new products on a regular basis.
This subscription model is basically a "surprise box" sent to your customer's mailbox, with products that are similar to the ones he usually purchases from you, or are in a category he chose.
You could price this kind of subscription plan by the commitment- the fee would be smaller the longer period the customer committed to (much like gyms). Or you could price it based on the estimated value of a box, so that the more the customer paid, the more products/more expensive products he would get in the box.
5. Mobile app
Once a customer downloads a mobile app, he is essentially committing to re-purchase from your store again in the future.
There are so many e-commerce sites these days, and so many of them have mobile apps, but would you download the app for each store you've ever purchased from? No, you will only download the apps of stores you love, and intend to buy from again.
The biggest retailers have a mobile app, and for a good reason- in 2017 82% of online users in the US shopped online on their mobile device, and 51% of mobile consumers said that they make their purchase through a mobile app, rather than a website.
Creating your own mobile app allows you to design the optimal user mobile experience for your customers and increase conversions, send direct push notifications from the app, reminding customers to visit your store, reward loyal customers and more.
So now you've decided you want to have a mobile app for your store, how do you go about creating one?
1. Hire a developer
If you are not a developer yourself, you can hire a developer or development company to do it for you.
The main advantage of this method is that you can design your app exactly as you want it- with full flexibility and control over the design, layout and content of the app, and no limitations.
When you have a developer working for you, you have their experience and advice on your side, helping turn your app vision to a reality, while making sure everything fits your brand like a glove.
This is the ideal path for a big business, having developers, UI and UX designers working for it, because this option is costly and complex.
Having an app that fits your needs perfectly is a very attractive concept, but you have to make sure you know what you are getting into before you begin.
First, building an app is complex- you have to think about things like: design, user experience, speed, testing, security etc. Of course, a good development team would take care of all of it for you- but that means that you would have to be very good at hiring, and find the right people (which could be pretty difficult if you don't have experience in the field).
Second, the whole process of developing an app would usually take a while, and can be quite costly. You would have to pay for your developers, designers and possibly QA, IT etc... All of this can and will get up to much more money than you paid for your store (if you built it on platforms like Shopify or Magento).
I'm not saying it to discourage you from building an app for your store- but you do have to make sure you are clear about what it would take before you venture into it. This option is something we would mostly recommend big brands having the resources and knowledge to successfully complete such a project.
2. There's an app for that!
So, what do you do if you don't have the resources and knowledge needed to create an app from scratch?
Simple, use an app! Wait, what?
If you are using one of the major online store platforms, chances are there is an app or service that could build your store's mobile app for you, without the need to hire developers, designers or any other professionals to develop your app.
The pros and cons of this method are pretty obvious: Pros:
Price- just pay the fee for the service creating your app, without having any hidden or extra fees, for things you did not think about while planning your budget.
Simplicity- no need to hire new people or learn complex new skills in order to manage a development project. You just need to learn how to work with the service and what works for mobile apps, and you're ready to go.
Time- no need to wait for long development times, just create your app and launch it. The development has already been done and you just need to build your app upon an existing interface, and can be ready to launch within a few days.
Cons:
Flexibility- whatever service you are using to create your app, it is probably not 100% flexible. That means that your app might not fit your store like a glove, and that you will have to work within the limitations of the service.
Professionalism- when you use a "do it yourself" kind of service, you will not have a professional UI/UX designer telling you how to design your app, and you might make some critical mistakes. But as long as you follow the service's guidelines, you're probably good.
This option is great for small and medium businesses that just need to have something up and running, and can give up on some of their design or functionality demands. If you're using Shopify, there are a lot of different apps available, but we recommend Tapcart.
So how do you stand out from the crowd of apps and retailers, and actually make customers install your mobile app?
Connect with your customers first- they are more likely to want to download your app and stay in touch with you if they already have a connection to your brand.
Offer special deals- make your customers want to use your app because of special discounts and deals they will only get while using it. You can also make downloading or purchasing from the app an integral part of your loyalty program.
Make sure your customers know about the app- don't wait for your customers to download your app from their mobile app store, offer them the option to download via emails, the thank you page and while browsing your store.
6. Follow up
Maybe the most important aspect of your customer retention efforts (other than having a good product), is to follow up with your customers.
Our goal with following up with our customers is to make sure they don't forget about us- if the next time your customer hears from you is just to receive the package, and then never again, chances are he will very easily forget about your store and not come back and purchase again.
All of the tactics we've discussed so far in this article are ways to give your customers the chance to make more actions in your store, and take the first steps in committing to a long-term relationship. But this tactic is all about what you can do to court your customers after they had already left your store.
Most store owners would always make sure to follow up on their leads- the people who've visited their store without purchasing. And that makes sense, considering that online store visitors retargeted with display ads are 70% more likely to convert.
But a lot of merchants neglect their existing customers in their retargeting efforts, and forget to follow up with them. But at the beginning of this article, we've already established how important it is to focus heavily on customer retention. So it goes without saying, that following up with our existing customers is crucial, right?
So now that we've talked about how important following up with our existing customers is, let's see how we can do it:
1. Email & messenger campaigns
From the moment you start getting traffic to your store, you need to start building 2 important assets: your pixel (which we will talk about soon) and your distribution list.
If you're not sure why you should work on building your distribution list from day one, it is important because it basically allows you to later market to your customers and leads for free, and keep in touch with them on a more personal level.
We recommend that you spread your distribution list across a few different platforms, so that you can contact each customer in the platform he feels most comfortable with, and you can increase your open rates significantly:
*the apps given as an example in this article refer to Shopify, but you could probably find their counterparts in other e-commerce platforms.
Once you have a few customers in your distribution list, you can use this list to market to them in a verity of different ways. Two important factors for the success of your distribution list marketing are: segmentation and automation.
Segmenting your distribution list allows you to focus on sending the right message to the right people, and avoid spamming your subscribers. While automation allows you to use sequences, targeting your customers with certain messaging flows.
Here are some ideas for ways you could use your distribution list to convert one-time customers into returning ones:
Birthday benefit sequence- inviting your customer to purchase with a special birthday offer.
Product launches- send out a product launch campaign to let your customers know there's something new to look for.
Content marketing- you can get away with sending many more emails updating about a new blog post, provided you give value in your posts. Invite your customers to read new posts on your blog, which would bring them back to your website, and keep you on their mind.
Customer service surveys- learn what your customers want and how they feel about the service in your store, while at the same time reconnecting with them and letting them know you care.
Seasonal sales and promotions- similarly to birthday benefits, celebrate holidays and special occasions with your customers, by offering them some special holiday spirit sales. To make this personal, you could offer deals on products similar to the ones your customers purchased in the past.
2. Retargeting ads
Another way to reach your customers post-purchase is to use retargeting ads, which allow you to display a specific ad to customers who had already visited or purchased from you. You can actually segment these ads by the type of products the customer purchased, how long ago the purchase was made and more.
At the first point, email & messenger campaigns, we've mentioned the need to start collecting your pixel the moment you have traffic in your store. This pixel allows you to collect the people who purchased from you into an audience, and can improve your targeting in a lot of different cases, but is an obsolete must if you want to run retargeting ads.
You could advertise on Facebook by running a Facebook retargeting campaign, using audiences that you collect through Facebook pixel. Or you could run a google remarketing campaign, to advertise to your customers a verity of websites partnering with Google. 3 key principles to note when running a retargeting campaign are:
Don't spam- your customer seeing your ad a few times a day is good. Your customers seeing your ad 20 times a day... not so good. Most retargeting campaigns allow you to limit the number of times a day a customer will see it. We strongly advise that you use it.
Use dynamic ads- dynamic ads allow you to create one copy, and change the creative according to your customers' past actions. That way, you can display an ad recommending products that the customer viewed in the past but didn't purchase.
Segment- separate your buyers from your leads. You would probably want to retarget both of them, but approach each differently, so make sure you separate them into different audiences, and adjust your ads accordingly.
3. Use your packaging
Last but not least, use the next time your customer is guaranteed to pay attention to you to try and reconvert him- the package arrival day!
Just like the thank you page, the product package is an opportunity to strengthen your relationship with your customers, when they are least expecting it. Use your packaging as one last push in your customer retention efforts.
Up the excitement for your customers by reminding them WHY they placed that order in the first place. Tell your customer something that they can a good hit off, too. Like, 'You deserve this', or, as getadatebox.com boldly announces, 'It’s time for your date'.
- DHL.com
A branded package is nicer on the eyes and increases brand awareness- when a customer receives a package with your design and logo, it makes the whole package seem more legitimate and associates your brand with the excitement the customer feels about receiving his order.
But designing your packaging is just the beginning, why not utilize the package as a tool to surprise and delight your customers, and increase customer retention? Some ways you could use your package to drive more sales are:
1. Hand-written note- Brand loyalty is built when a brand makes its customers feel valued and appreciated. Big, status-symbol brands do that by name and reputation alone- a person owning a Gucci bag feels validated by his association with the expansive brand.
But a smaller brand, just starting out, can validate its customers, and increase customers' loyalty, by finding ways to go above and beyond for them, and making them feel valuable. Adding a hand-written note to thank your customers for purchasing from you and acknowledging their importance to you and your business is one wonderful, cost effective way, to do just that.
Individual 'thank you' notes can make a real difference to customers' brand perception. Including a simple, handwritten note thanking your customer for choosing your brand humanizes it and makes your customers feel special.
This note might not be a direct trigger for your customers to purchase again, but it will make them feel appreciated and make you stand out in their eyes.
2. Coupon code- We've talked in this article about giving away discounts and coupons to your customers in the thank you page, distribution list campaigns and retargeting ads.
Well, the package is another wonderful opportunity to give a coupon code- right when the customer is excited about his package's arrival, offer him the option to buy some more with a discount.
This coupon is right in front of your customer's face, when he opens his package, it's not something he received in an email he might or might not read.
You can add a card thanking the customer for the purchase and offering a discount for the next one. And in order to make it especially easy to use, you can use a QR code that will apply automatically when the customer scans it with his phone.
3. Shareable packaging- Turning your product package into something that your customers want to share on social media with their friends is good not only to make sure you stay on your customers' minds, but also for exposure to new customers.
Get your customers excited about your brand and packaging, and make them want to talk about it and be seen with it. Some of the properties of a shareable package are:
Aesthetically pleasing- this one should go without saying, but we're saying it anyway. Make sure the package looks good, and contains the brand's colors and name/logo.
Trigger an emotional response- whatever it's funny, touching, delightful, outrageous... an emotional response is what makes us want to share. It really doesn't matter, as long as it fits your brand.
Uniqueness- don't blend in with the dozens of other packages your customers get in the mail- make sure your package and product delivers a little something "extra" that makes you stand out.
Sharing incentive- you can offer an incentive for your customers to share their order with friends, by giving a discount or cashback for sharing and tagging you. Using services like Swave you can collect these shares and give the discounts automatically.
Key takeaway
While focusing on customer loyalty an retention is crucial for your business success, it is also important to do it in a genuine way.
At the end of the day, the one thing that encourages loyalty is loyalty- be loyal and true to your customers, seek to provide value for them and you are guaranteed to eventually collected the right crowd for your brand.
It is important to plan and be intentional about your customer retention efforts- since like we said, loyal customers will not just appear out of thin air. We've offered in this article 5 different, yet effective, strategies to increase customer loyalty and retention. But each strategy can be implemented in many different ways. Choose the ones that fit your brand's voice and use only them.
Good luck, and don't forget to share and invite your friends to read, if you think they can benefit from the article.
