If you’re like us, your inbox is flooded with articles trying to tell you how to grow your sales. Some have good advice, but most miss the mark because they don’t start from this fundamental principle — the ONE thing that makes an Ecommerce store profitable. Here it is upfront: A profitable store is one where the profit made from a customer (the lifelong value or LTV) is more than the cost spent on acquiring that customer (the customer acquisition cost, CAC). To make your store profitable and see growth in the long run, your safest bet is to focus your efforts customer retention.
Why should I make customer retention my priority?
We’ll let the data speak itself: According to the Harvard Business School, increasing customer retention rates by just 5% can raise profits by 25% to 95%. And it costs five times less to keep an existing customer than to attract a new one through the most common lead generation strategies. In short, customer retention increases profits for your business at a much lower cost of acquisition, meaning that your profit margins are larger for returning business.
Building a loyal customer base can also increase referrals and other organic leads, creating a positive feedback loop for growth. That’s a win-win-win situation.
How can I improve my customer retention rate?
Customers are likely to return if they trust your brand and feel satisfied with your product and service. At HiSumo, we build trust with customers by sending accurate information at the right time and solving their problems instantly. We only ask them to opt in to a newsletter or promotion if they are happy with the purchase — these satisfied customers are much more likely to read our messages and come back for more. Based on our research and case studies, we have identified 3 techniques successful Ecommerce stores of all sizes use to improve their customer retention rates:
1. Give them a reason to come back
Coupon codes or other incentives are an easy way to bring customers back to your storefront. Sending your existing customers inside deals at least once a month can build loyalty to your brand. It can be Summer Sales, a Mother’s Day Deal, you name it. Just give them a reason to come back.
Think about it: There are over a million online store nowadays. No matter how unique your product is, you would probably have more than a thousand competitors who are looking to capture your customers at any time. That’s why you have to keep giving them a reason to come back. It helps them to remember your shop when they have needs to purchase your kind of products, and in many cases promotional content in itself can raise their need to repurchase.
2. Send useful tips to buyer
If you want your customers to really read your emails or texts, you cannot just keep sending them self-interested promotional emails. They will ignore those over time if you don’t find meaningful ways to build trust in your brand. Sending tips or useful articles related to your field or products can help establish your brand’s authority while maintaining your customer’s awareness and visibility of your products. Engage customers with useful content and you will see improvements across the board for open and click rate, including for your cross-sell or up-sell emails.
3. Connect with buyer on social media
Everyone knows social media is key. But we aren’t talking about product content or blog posts: We are talking about using social media to engage with your customer, provide customer service, and help them to solve problems in their life. Interact with your customer the way a friend might — it will make your brand more human, and your customers will treat you as a friend in return.
In the end, there are no secret shortcuts to increasing your customer retention rate. Trust and satisfaction are established over time, and no technique will provide a quick fix to convert one-time purchasers into lifelong brand loyalists.
This long-term mentality can help you succeed not just in your retention efforts, but in your larger goals for growing and profiting from your business. Remember that creating anything with the potential to become great (like a company) takes at LEAST 5 years. In most cases it takes 7–10. If you don’t believe us, take it from the experts:
“Nothing good happens without insane amounts of consistent, focused work.”
So in your pursuit for growth, ditch the myth of the overnight success. Truly successful online stores build a following by improving their products and connecting with their customers one day at a time. Things that seem like repetitive and time-consuming tasks today are in fact investments in your brand equity that will pay off in the long run. Stay persistent and patient to see your efforts through to success!
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