Drive to Reimagine

7 powerful ways to increase eCommerce customer retention

Jeremy DSouza
.
Oct 6
.
4-5 mins

Table of contents

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Ways to increase eCommerce customer retention

What is customer retention?

Customer retention refers to all your efforts to encourage repeat purchases from your customers over a long period, increase customer loyalty, and maximize your customer lifetime value (CLTV).

These efforts help you increase the revenue you gain from customers you have already acquired instead of spending all your energy on trying to find new customers.


Why is customer retention important in eCommerce?

Acquiring new customers is 7x more expensive than retaining existing customers. So, if you focus all your time and energy on acquisition without bothering about retention, it’s like trying to fill up a tank that’s got an enormous hole in it.

You’re going to waste too much time, effort, and money without results that are worthy of that investment.

How to calculate customer retention in eCommerce?

There are a few ways to calculate your customer retention rate, but let’s look at a basic one here.

First, define the period that you want to calculate your eCommerce customer retention rate for. Now, find out how many customers you had at the beginning of that period, how many additional customers you acquired during that period, and the total number of customers you had at the end of that period.

Here’s the formula:

Customer retention rate = [(Customers at the end - Additional customers)/Customers at the start] x 100

Let’s say you had 1500 customers at the start of the period, acquired 800 during that period, and ended that period with 1900 customers.

Now, here’s your retention rate:

[(1900 - 800)/1500] x 100

Which works out to 73.3%.

How to improve your eCommerce store’s customer retention rate?

1

Customer accounts

When your customers create accounts on your site, it makes future purchases easier for them while giving you access to their email ids. This makes it easier for you to run campaigns to win them back. 

But forcing them to create an account is a bad idea and will result in cart abandonment.

A good option would be to permit guest checkouts but ask them to create an account after placing their first order. Since they’ve already taken action, they would feel more open to this. They would mentally justify this by thinking something like this, ‘I made a purchase, which means that I like what this store has to offer. This means that I would come back later, and creating an account makes sense.’


2

Simplify purchases

The easier you make it for your customers to do something, the more likely they are to do it. 

A lot of us delay purchases out of laziness. Now, what if your customers did not need to hop across best eCommerce platforms to make a purchase? What if they didn’t need to visit your website or even download your app?

Imagine this: your customer spends time on Twitter or WhatsApp and suddenly realizes that they need to buy something. What if they didn’t need to switch apps and could make the purchase right there?

Deploying an intelligent chatbot on these apps allows you to display your catalog and drive sales right there without forcing customers to hop across platforms. And Engati’s eCommerce chatbots help you do that on WhatsApp, Twitter, Messenger, and 10+ other touchpoints.

Blibli Messenger E-commerce chatbot for sales and support
Blibli's eCommerce chatbot engages customers and drives sales in Indonesian over Messenger

3

Subscription plans

If you sell products usually bought at set intervals, give your customers an option to subscribe and save some money. You offer them a discount, and you get repeat sales without your customers having to think about making the actual purchase.

While this would usually be done with recurring-purchase items like supplements, printer cartridges, or coffee, you can still make use of the principle if you sell items that are not purchased too frequently. 

What you need to do, in that case, is find an item that can complement the main purchase. Now, get them to subscribe for the thing that would cost less and be purchased more frequently. 

Take the classic example of razors and blades. You sell the razor, get them to subscribe for the blades. Now you are not only getting them to buy all their blades from you, but when the time comes for them to buy a new razor, your store is No.1 on their minds.

4

Offers for first-time buyers

As soon as your customers place their first order, offer them a discount or store credits that can be redeemed on their next order.

Now they’re already considering coming back because of the offer, and if you created a great customer experience the first time around, the odds of them returning when they need to make another purchase will skyrocket.


5

Loyalty programs

This isn’t a new concept. They’ve been around since the 1700s. Do all of them work? Probably not. Some can be a bit expensive to sustain, and some might just not entice customers as much as they should. But done right, loyalty programs can be a powerful way to drive customer retention.

Now sprinkle a little gamification, and they get even better. Set up levels and give your customers badges. Create a leaderboard. Customers at the top of the leaderboard could even get access to exclusive rewards.


6

Gifts

Sending an unexpected gift is a great way to make your customers feel better about you. Even if it’s not an expensive gift, that’s not an issue. A gift would trigger the reciprocity effect, making them more likely to make a purchase.

You could even cut costs by sending these gifts to your best customers, potentially increasing their lifetime value and getting them to tell their circles about you. The Journal of Marketing Research reported that giving free gifts tends to boost word of mouth by 20%.


7

Improve your support

Stepping up your customer support can have a significant impact on your retention rate. It can help you turn frustrated customers into brand evangelists. The key is to resolve their issues as fast as possible.

With phone or email support, it’s not possible to do that. Waiting on hold is a frustrating experience while spending a day hoping for a reply to your email is just annoying.

Deploying a Shopify chatbot on your eCommerce website helps you scale up your support in your customers’ languages of choice. It helps you create an omnichannel experience, engaging and supporting your customers across 14 touchpoints.

While your bots handle common, repetitive queries, you can have live chat agents handle the complex ones. Live chat increases efficiency in comparison to phone support because your agents can now handle multiple conversations simultaneously.


TLDR

We can group these retention strategies into three categories:

1

Simplify

Make purchases easier by getting customers to create accounts and subscribe for recurring purchases. Allow them to place orders over multiple touchpoints by deploying eCommerce chatbots.

2

Tempt

Use discount offers and free store credits along with loyalty rewards programs to keep your customers coming back for more.

3

Delight

Create positive customer experiences by sending unexpected gifts. Answer all their questions and resolve all their issues, no matter how complex, in real-time with intelligent chatbots and live chat.


Jeremy DSouza

Jeremy is a marketer at Engati with an interest in marketing psychology and consumer neuroscience. Over the last year he has interviewed many of the world's brightest CX, AI, Marketing, and Tech thought leaders for Engati CX.

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