How Customer Retention can Power your eCommerce

15 Apr 2021
Albert Wood
Albert Wood
How Customer Retention can Power your eCommerce

If your business relies on customers for continuous revenue, then it’s time to focus on customer retention. It’s one of the primary keys of revenue strategy for nearly any business.

Having a customer retention strategy to implement is vital to your business’s long-term success. And in the internet age, it’s easier than ever to build and launch a plan that your customers will love and keep returning to your business.

What Is Customer Retention?

Customer retention is a term that is used to describe the process of keeping customers that you already have. This means that, instead of focusing on gaining new customers, your focus is on keeping the customers that you have.

It seems counter-intuitive, but the truth is that customer retention can be more profitable than customer acquisition.

This is true for several reasons:

  • Gaining new customers is expensive
  • Customer acquisition demands a large amount devoted to budget resources
  • In another way, retaining customers is both inexpensive and easy.
  • You can retain customers by making sure your product or service continues to meet or exceed their expectations.

Why Customer Retention Is Significant for eCommerce?

Without customers, a business has no business. That’s why customer retention is so critical.

Customer retention is the number one goal of any eCommerce business. The reason for this is that it is much more economical to keep an existing customer coming back through campaigns.

For example, incentives or a loyalty program will be much less expensive than investing in new customers.

This is because of the fact that most big eCommerce businesses have a setup cost of hundreds of thousands of dollars. For this reason, eCommerce businesses often spend millions a year on marketing.

It’s well documented that it costs five times more for a business to attract new customers than it does to retain existing ones. That’s why every business wants to keep their customers happy and retain their loyalty.

How to Retain eCommerce Customers?

With the right marketing strategies, you can keep a far higher percentage of your customers. The work you do to find and convert leads will increase in value, and you’ll see the difference in your bottom line.

  • Implement Cross-Selling and Offer Complementary Items Together

Have you ever been shopping online, saw a section labeled something along the lines of “customers also bought,” and found yourself looking at a crowded shopping cart 45 minutes later? There’s a reason for that.

Cross-selling is a marketing strategy in which companies offer similar or related products to shoppers. If you’re buying a beach towel, the reasoning behind this strategy is that you may be interested in a beach ball, a swimsuit cover-up and sunscreen too.

Often, the logic behind cross-selling is correct. If a customer is already purchasing something from your online store, they’re more likely to buy the complementary products you present them with too. Online shopping is easy, but it’s even easier when you can get everything you need, want or just thought was interesting through a single site.

Suppose your company sells one or two highly specialized products without much overlap. In that case, you may still be able to take advantage of cross-selling by offering insurance packages or extended warranties for each of the products.

Few products are one-time purchases. If you can prove to a first-time buyer that you can provide them with everything they need and more from the comfort of their home, they’re more likely to return to your web store again and again.

  • Create Additional Value per Customer With Upselling

Upselling is a marketing strategy in which you point out that another, higher quality product similar to what the customer has selected. You point out how the slightly more expensive product would suit their needs better, and sometimes, customers decide that you’re right. More functionality often is worth more money.

Think about buying a new car. You go into the dealership determined to buy the most basic model available of the vehicle you want. The salesperson has other ideas, and when they tell you that for X amount of money more you could have heated seats, it’s tempting to agree. That’s upselling in action.

Upselling has two primary benefits. The first is that it generally increases the amount of revenue generated per customer. The second is that customers tend to have higher rates of satisfaction. You’re making more money, and they’re getting something more valuable than they thought they would. Everyone wins.

Higher customer satisfaction leads to higher rates of customer retention, too. If your customers are happy with the products and services you have provided, they will not shop around for something that they may or may not like better. People live busy lives, and it’s just not worth the effort.

  • Involve Different Mediums in Your Marketing Campaigns

Another effective method of marketing is to incorporate different types of communication into your campaigns. We’re well beyond the days where door-to-door salespeople or even cold calling were the extents of how you could connect with customers.

In an increasingly global and digitized world, you can communicate with almost anyone at the press of a button. In response to the overwhelming number of emails many people receive each day, some enterprising companies are moving toward SMS or text messaging, typically offering some type of deal if the customer orders immediately.

The mediums you use to communicate with potential repeat customers should be well-rounded but suitable for the audience you’re attempting to reach. College students and other young adults, for example, probably don’t have landlines. Many older people don’t have an extensive social media presence, so any advertising you do on Twitter, Reddit or other more niche sites likely won’t reach them.

  • Use a Loyalty Program To Maintain Engagement

Loyalty programs are one of the best ways to keep customers coming back for more. Whether you’re offering a punch card or a points system, people are competitive, and they love to feel like they’re getting something for free.

This is another situation in which customers and companies end up happy. The customer has saved money on something they likely would have bought anyway, whether that’s a hotel stay or a cup of coffee. The company has retained a customer in an incredibly competitive environment.

Eventually, customers may get into the habit of using your business or grabbing your brand off the shelf when they see it, whether they’re still a member of your rewards program or not. That’s a great relationship to have with a consumer.

  • Be Aware of RFM Metrics

In this case, RFM stands for recency, frequency and monetary value. Examining these three metrics can provide you with invaluable insights into your customers’ journeys and thought processes.

Recency refers to how long it has been since a customer placed an order with you. Frequency is defined as the number of times a customer buys from you. Monetary value is the amount of revenue generated by an individual customer during each of their purchases.

You can use this data in an RFM model to determine the value of a particular customer. Based on each number, rate a customer on a scale of one to five, with one being the lowest and five being the highest. You can then average their score across the three categories and come up with a number that gives you their relative value to your company.

When you have identified your most valuable customers, you can focus your marketing and sales efforts on them.

Alternately, you might want to approach the situation with more nuance. Perhaps a customer tends to make one or two purchases with a high monetary value every year, but they haven’t recently. This data will inform you of the fact, and your sales team could reach out to them.

On the topic of data, having a well-thought-out privacy policy and the ability to keep your customers’ data secure can be a selling point in the digital age. How many times have you seen a news headline about a data leak resulting in countless credit card, phone and social security numbers splashed across the Internet?

Obviously, that’s a public relations nightmare, and avoiding it will make everyone’s lives considerably easier. With customers being increasingly informed and concerned about data privacy, being able to offer reassurances is invaluable.

  • Prioritize Excellent Customer Service

Nothing drives customers away faster than rude, unfriendly or unhelpful customer service. When customers have a good experience with your company, on the other hand, they’re more likely to continue buying your products and using your services.

The benefits of excellent customer service go beyond customer retention, though. Unless otherwise incentivized, it’s only extremely satisfied or angry customers that leave reviews. The former is vastly more preferable than the latter, and the trick to achieving it is often providing the best customer service experience possible. A few enthusiastic testimonials can change the course of your business.

There’s more to customer service than the interactions your customers and employees have, whether that’s in person, via email or over the phone. Your website needs to be easy to navigate, as does your online checkout process. When your website runs smoothly, your customers will be happy.

Having a well-designed website has the added benefit of aiding your search engine optimization efforts, meaning your site is more likely to appear at the top of a search engine results page. The engineers behind search engines like Google have created algorithms intended to mimic what someone browsing the web would look for in a site, so you can align your efforts to satisfy both groups.

  • Emphasize Corporate Responsibility

“Corporate responsibility” is a buzzword that continues to gain in popularity. How you incorporate it into your company’s values and mission will depend on the industry you’re in. Generally, it involves a focus on sustainability. Social responsibilities are beginning to play in as well, however.

According to Forbes, more than 80 percent of investors look at social and environmental factors when deciding where to put their money. That’s a percentage too large to discount.

Corporate responsibility can take a variety of forms. Some environmental ideas you could incorporate:

  • Going paperless.
  • Participating in community clean-ups.
  • Reducing your carbon footprint.

Some social ideas to try:

  • Sponsoring a volunteer day within your community.
  • Charitable giving, such as funding a scholarship for a local high school graduate.
  • Efforts toward creating a more diverse and inclusive workplace.

Employee morale often improves in companies that strive to impact the communities they call home positively.


“If you have a customer, you have a future,” wrote Peter F. Drucker. Why? Because the customers you have are the ones you made a genuine investment in. They will continue to be a source of revenue to you.

The more customers you have, the more you’ll make. So, how can you retain your customers? By keeping them happy. Your business will suffer if you don’t think about your customers. And in the end, it’ll cost you big time.

Retaining eCommerce customers can be challenging, but it’s worth the effort. Reducing turnover within your customer base will save you time, money and effort.

We recommend that if you don’t have one, it’s time to start getting your customer retention strategy together with ioVista.

Albert Wood
Albert Wood linkedin

Albert Wood is an accomplished eCommerce Business Analyst. As a technology futurist and sales motivator at ioVista, Albert is dedicated to transforming struggling eCommerce businesses into thriving enterprises. With a keen focus on client’s business processes, user experience (UX), and leveraging the power of digital marketing, he helps businesses optimize their online presence and drive sustainable growth. Albert’s passion is for virtual reality (VR), augmented reality (AR), and mixed reality (MR), immersing himself in unforgettable experiences and exploring the limitless possibilities they offer. His enthusiasm for these emerging technologies fuels his drive to push the boundaries of innovation in eCommerce.

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