It is hard to imagine a world without online shopping, food delivery, and service places, isn’t it? We are in the e-commerce era where we can buy and pay for services and products within the comfort of our homes, offices, hotel rooms, etc. Today, e-commerce is a $6.3 trillion industry globally with some studies suggesting that it is likely to touch the $8 trillion figure by the end of 2027. With over 26.5 million e-commerce websites in the world today, one thing is clear; it is a very cluttered market with a pressing need to stand out and more importantly, retain customers to thrive.  

As more and more players enter the market to serve the widening e-commerce consumer base, they need to focus on both; customer acquisition and retention. While customer acquisition tactics are widely discussed, many small and medium e-commerce players overlook the importance of customer retention.  

A well-thought-of customer retention strategy ensures lower cart abandonments, better average order values, and improved purchase frequency. This article sheds light on some effective customer retention strategies every e-commerce business can use to improve customer retention and drive revenue.  

What is customer retention and what is a decent e-commerce retention rate?

Before we learn how to retain customers, let us understand what we mean by e-commerce retention and what qualifies as decent retention.  

Customer retention is the consistent efforts, or a process developed to ensure your existing customers purchase your services and products again. In short, they must return to you instead of looking at other options.  

Now, what do we mean by customer retention rate? 

Customer retention rate is the percentage of current customers that purchase from you within a stipulated time frame. The higher the number of repeat orders your brand or business receives, the higher your customer retention rate.  

Presently, online businesses have an average retention rate of around 28%. That said, the retention rates vary from industry to industry. However, most business owners and marketers agree that retention rates between 25 to 30% are decent, so anything above 30% is impressive.  

Customer Retention Strategies for E-commerce Businesses

Now, to the crux of the matter; e-commerce customer retention. Learn how the most successful e-commerce players including Amazon, Alibaba, and eBay retain their customers and what it takes to dominate the e-commerce ecosystem.  

Let’s begin.  

1. Personalized Communication 

While it may seem exaggerated, personalized communication is very important to improve e-commerce retention. Admit it, we aren’t fans of generic emails and push notifications, are we? Additionally, generic, dull, and bland communication isn’t interesting. Today, around 73% of customers expect a brand to understand their needs and deliver better personalisation. Additionally, around 80% of customers are willing to pay for a company’s products and services if they have a great overall experience while engaging with it.  

Personalisation is much more than using a customer’s name in an email. Customers expect deals and offers tailored according to their requirements and buying characteristics. The advent of cutting-edge platforms enables businesses to track these metrics and craft personalised marketing strategies to improve retention.  

2. Loyalty Programs

Reward your customers from time to time. Creating a loyalty program is an excellent customer retention strategy that has worked wonders for many brands. Look at Starbucks for example. You can offer tailored deals, cashback, and discounts on different products based on the customer’s buying history and preferences. You should also consider creating reward tiers to encourage them to spend more. You can gamify the process and add points to their virtual profile based on how they engage with your business.  

3. Email Marketing

Despite the arrival of social media and influencer marketing, email marketing continues to remain one of the best ways to communicate and make your customers feel valued. Create a compelling email marketing campaign with exclusive offers for different types of customers depending on their preferences. Ensure your communication encourages them to act quickly by creating a sense of urgency. For example, use words like “limited-time deal” “50% off only today”, etc.  

4. Customer Service

No matter how your product or service is, your customers will reach out to you when they have a query. Many brands create amazing products but fail to address their customer’s doubts, resulting in poor retention. Lacklustre or average customer success programs can make your customers feel undervalued and unneeded and that is the last thing you want. Additionally, do not outsource your customer service to a third party which does not necessarily care about your brand or business.  

The evolution of technology has paved the chatbots and empowered businesses to create automated response sequences to handle customer queries.  

5. Referral Program

Yes, we are looking at yet another effective ‘program’ to boost customer retention namely, a referral program. Remember the good old word-of-mouth marketing? A referral program is similar, except you are rewarding your customers to promote or refer your brand to other people. A referral program allows your current customers to refer your business to their friends or family, mostly with a unique referral code or link. Most e-commerce businesses reward their customers when their referrals complete a purchase, so you could take a leaf out of their page.  

6. Social Media and Digital Marketing

In a world where nearly 5.3 billion people use social media, it is blasphemy to ignore social media marketing and its impact. Social media is a great way to interact and engage with your customers. Craft a solid strategy for every social media platform relevant to your industry to promote and create a brand culture.  

Apart from social media, you must also consider other digital marketing channels including Google Business, Google Ads, etc. It is a good time to include digital and social media marketing in your e-commerce customer retention toolkit as more than 23% of retail purchases are likely to be online by the end of 2027. 

Wrap Up

E-commerce companies that strike a balance between customer acquisition and customer retention will succeed in 2024 and beyond. With increasing competition and evolving consumer behaviours, it is vital for brands to nurture relationships and find answers to this very important question; how to retain customers.  

We hope these customer retention strategies work out for you and help you retain more customers and increase your revenue.  

Frequently Asked Questions

How can businesses measure the success of their customer retention strategies? 

Businesses can measure the success of their customer retention strategies by tracking their customer retention rate per defined period, lifetime customer value, net promoter score, and customer engagement rates.  

Can businesses use technology to enhance their customer retention strategies? 

Yes, the arrival of cutting-edge solutions backed by technologies including AI and machine learning allows businesses to create better and more effective customer retention strategies. These platforms allow businesses to track the key metrics of their customer retention tactics, create personalised offers and marketing communication, and improve customer service with chatbots, and more.  

What are the 4 stages of customer retention? 

The four stages of customer retention are acquisition, onboarding, engagement, and retention.  

What are the 8 Cs of customer retention?  

The 8 Cs of customer retention include care, community, customisation, cultivation, connection, character, choice, and convenience.