The sheer volume of brands online may create the illusion that brand loyalty is dead. However, consumers will always want to shop with businesses they trust, so as an ecommerce company, it’s your job to ensure every online interaction with your brand leaves the customer wanting more. Research shows 60% of consumers say they’ll become repeat customers after a personalized shopping experience.
Why is customer retention important for your ecommerce business?
Nearly every business works toward reaching a wider audience and bringing in new customers – more customers mean more revenue. Sounds simple enough, right? Unfortunately, the cost of acquiring a new customer is almost 5 times higher than the cost of retaining an existing customer. Hence, retaining a buyer who is already your customer can be more cost-effective and profitable than bringing a new customer on board.
Let’s look at some data on why ecommerce businesses should focus on customer retention strategies:
- You are 60-70% more likely to sell a product to your existing customer, while the probability of making a sale to a new customer is only 5-20%.
- Existing customers spend 67% more when they’re part of a loyalty program. Creating incentives for repeat customers can help drive up purchases.
- When a business launches a new product, your existing customer is likely to spend 30% more on it than your first-time customer. Existing customers can help increase your shopping cart value.
- A 5% increase in your customer retention rates can increase your business profits by 25%-95%.
- 82% of businesses agree that retaining their old customers is cheaper than acquiring new customers.
Top 7 customer retention trends for ecommerce businesses in 2024
As consumer expectations evolve and new online experiences emerge, how ecommerce businesses engage with their customers is also changing. Here are a few important trends to help maximize Customer Lifetime Value (CLV) and lower acquisition costs.
- Emotional loyalty
Emotional loyalty refers to a customer’s commitment to a brand demonstrated by their psychological preferences, attachments, perceptions, opinions, etc. Oftentimes, the brand shares a deep understanding of the customer and is able to create a holistic customer experience for them. This genuine connection between the buyer and seller can influence purchasing decisions significantly.
Shopping based on emotional loyalty is actually quite common – 72% of global ecommerce shoppers are attached to at least one brand or business. When consumers find a brand that empathizes with their personal choices, they tend to shop with them again.
However, establishing this loyal connection requires consistency. It takes three or more purchases for 88% of online customers to feel loyal to a brand. Each touchpoint across the web needs to feel like a cohesive experience, regardless of the platform. Consumers also like to know that their needs are understood, so providing discounts, recommendations, and suggestions based on their past purchasing patterns can demonstrate the value of shopping multiple times with the same business. This can be done through loyalty programs, targeting highly engaged customers with recurring incentives.
A perfect example is the Starbucks loyalty program. For every dollar a customer spends on the Starbucks app, they earn two stars, which can eventually be used for upgrades and freebies. Loyalty members also receive spontaneous notifications about new menu items, discounts, and holiday promotions, ensuring they always feel informed about the company’s latest offerings.
- Gamification
Gamification is a leading customer loyalty trend that involves the use of game-like elements to enhance customer interactions with brands. By participating, shoppers can earn rewards, points, discounts, badges, etc. to elevate their purchasing power. This strategy plays off of our innate desire to compete and accomplish tasks in exchange for recognition, making it an incredible tool for driving high engagement.
For example, the Nike Run Club app encourages users to keep track of their runs, set goals, and compete with their friends. Every time they reach a milestone, they unlock new rewards and features keeping them motivated – and engaged with Nike.
Source: goodux.appcues.com
- Using artificial intelligence (AI)
There are dozens of use cases for AI in customer retention today, one being the ability to analyze large volumes of customer data to stay updated about their evolving preferences and requirements. That data can then be used to influence purchasing decisions by providing personalized user experiences, such as tailored ads or product recommendations.
Source: aismartz.com
AI can also be customer-facing to improve communication between service teams and customers. Chatbots or voice assist technology can help resolve issues and offer support, such as answering questions about products or offering advice on certain items.
One prominent example of a company using AI to enhance the customer experience through personalized recommendations is Stitch Fix. Stitch Fix is an online personal styling service that uses a combination of human stylists and algorithms to curate clothing and accessory recommendations tailored to each customer's individual preferences, style, and fit.
Customers begin by filling out a detailed style profile and providing feedback on items they receive in their shipments. Stitch Fix's AI and machine learning models analyze this data along with other factors like browsing history and purchasing behavior to generate personalized recommendations for each customer. By leveraging AI-driven personalization, Stitch Fix has been able to significantly improve customer satisfaction and retention rates by delivering curated selections that align closely with each customer's unique tastes and preferences.
- Creating personalized shopping experiences
Providing customers with personalized shopping experiences can help make their shopping journey with your brand feel unique compared to competitors. Research shows that 77% of ecommerce customers choose brands that provide personalized shopping experiences and are ready to pay more to these brands.
One of the most notable examples is Amazon Marketplace. Amazon has 310 million customers worldwide, yet they offer each shopper an experience suited to their individual needs and preferences. From the marketing ads they run on their site to the recommendations they provide, the shopping experience is customized according to the behavior patterns of each person.
- Providing tiered benefits
A tiered loyalty program is the ultimate way of incentivizing customers to solidify their commitment to your brand. It provides shoppers with multiple options for engaging with your business, such as rewards, discounts, and exclusive features, based on their level of interest and investment. For instance, customers can unlock different gift card amounts when they reach different spending targets. Not only does this incentivize future purchasing, but it also rewards customers based on their loyalty.
One such example is Netflix. The streaming service offers tiered subscription plans, with each plan supporting different subscription durations, number of screens, and number of users. While the Basic plan could be enticing for new customers, longstanding subscribers will likely upgrade to Premium over time to improve their Netflix experience.
Source: 9to5mac.com
- Creating a seamless onboarding experience
First impressions are the best impressions, and sometimes the only chance you get to establish a customer relationship in ecommerce – 74% of users will revisit a user-friendly website. When a shopper first enters an online store, they should know exactly who they’re shopping with and where to go to find exactly what they’re looking for. Brands need to assume new shoppers aren’t familiar with their business or products, so all product information should be clear, detailed, and engaging. This prevents confusion and leaves a lasting impression.
For instance, ASOS, a leading online fashion retailer, excels in providing a user-friendly onboarding experience. Upon arrival, new visitors are directed to personalized recommendations based on their browsing history or preferences, ensuring they find relevant products quickly.
- Analyzing customer feedback
Customer feedback is the most direct way of learning what will bring buyers back. Were they satisfied with their purchase? Did they have all the information they needed upfront to make decisions? Were there any discrepancies in their expectations versus reality? Carefully paying attention to customer reviews and testimonials helps inform customer retention efforts.
For example, Airbnb regularly gathers feedback from guests after their stays to improve its platform. This feedback helps identify areas for improvement, such as cleanliness or amenities. Airbnb then takes action by addressing issues, enhancing features, and recognizing exceptional hosts. By actively listening to customer feedback, Airbnb can refine its services, driving customer satisfaction and loyalty.
By molding experiences, services, and products according to the preferences of customers, brands can’t always save a lost sale, but they can increase the chances of future ones. Cultivating long-term relationships with existing customers is the most cost-effective way to build a healthy customer base and grow your business. Discover how Productsup helps brands maintain engaging customer experiences through high-quality, personalized product content.