Undoubtedly, the business’s success depends on gaining and keeping customers. Still, entrepreneurs tend to focus on acquisition rather than retention. In this article, we will discuss why businesses should focus on e-commerce customer retention.
But before we get into the reasons why customer retention is more important than acquisition, let’s look at some basic facts about customer retention.
What is Customer Retention Rate (CRR)?
CRR is a business metric that measures how many customers return and buy. Retention helps you distinguish your company from competitors by assessing your customer service and product quality. Knowing whether your marketing efforts are strengthening your company or causing financial loss is a process.
Maintaining a high customer retention rate can help you avoid a sudden business failure.
Why E-Commerce Customer Retention Rate Matters?
Numerous studies on factors affecting customer retention and consumer behavior reveal that customer retention is very beneficial. A 5% increase in this rate can increase your business profits by up to 95%. According to the data gathered, keeping existing customers is cheaper than finding new ones.
Returning to the point, let us examine some traits that show the importance of customer retention in an entrepreneur’s life.
A higher retention rate puts your company in a great position to maximize each customer’s lifetime value.
In marketing, lifetime value (LTV) or customer lifetime value (CLTV) is an estimate of future profits attributed to a customer.
According to marketing experts, only 20% of current customers will generate 80% of future revenue. It is easier to sell to such customers. Moreover, re-purchasing customers is 60-70 percent likely, whereas acquiring new customers is only 5-20 percent likely.
Thus, improving customer retention can help your company generate more revenue.
Retained customers will act as your company’s powerful advertising agent. People trust their friends and family more than you, so using them to promote your business’s products and services will be beneficial.
As a business owner, you must consider cost when determining your customer retention strategies. Getting and keeping customers accounts for a large portion of costs. Customer service is as simple as saying it. You can easily convert your customer services into a competitive advantage by using an intuitive UI, powerful reporting tools, effective integrations, and automation.
Retention efforts not only generate more revenue that can be directed towards acquisition efforts, but also provide valuable insights to improve marketing efforts to gain new customers.
Content is king in marketing. So, the key marketing question is ‘who should you target with content?’ Existing customers, obviously. This is to build a solid customer base.
It’s easier to target prospects who share your customers’ traits if you know who they are. It is estimated that acquiring new customers with similar characteristics to existing customers will result in higher retention rates.
Enhance Onboarding Process:
In today’s competitive world, business leaders look for tactics that ensure customer satisfaction. The onboarding process is the best way to ensure your customers are happy with their purchases.
The onboarding process helps new customers gain skills and knowledge to maximize your product. By analyzing your existing customer data, you can easily identify why customers leave during the onboarding process. This helps you improve your onboarding process for new customers.
Two good strategies to improve your onboarding process are:
- Give new customers a tutorial on how to maximize their newly purchased product
- Identify and remove potential onboarding roadblocks for customers.
Existing customers can help your business grow by making repeat purchases and referring new customers. Moreover, retaining customers is less expensive than acquiring new ones. Existing customers can also help improve your marketing efforts and provide great ideas for improving the onboarding process. So, focus on increasing your customer retention rate as it is critical to the success of your e-commerce business. You can also use ORM Services to maximize customer retention and ensure business success.