What do the top e-commerce businesses and retailers have in common that helps them grow and sell more?
The answer is: repeat customers.
But to get those customers, you'll need to consider one or more customer retention strategies.
There's a saying in the world of business that repeat customers help businesses sell more.
The truth is: It's not just a saying.
There are tons of stats that indicate that repeat customers, aka loyal customers, make businesses more profitable. And we'll get to that in a minute.
But have you ever wondered what these businesses who have many loyal customers have in common?
The answer: They focus on their customers.
A loyal customer is someone who not only likes your products, services, or overall store, but also comes back to you regularly.
Sarah who likes shopping in your books section prefers to come to your store to get her books instead of buying them from Amazon or any other store.
This means Sarah is one of your loyal customers.
And as a store owner or marketing manager, you want to retain customers like Sarah because they offer a bigger chance of repeat business.
Loyal customers are those who come in to your store regularly. Like Sarah.
They are customers who will tell their friends and family about you because they like your products and services. Or because they like the customer experience or personalized experience they get when buying from you.
They are customers who may be willing to forgive you for that time when your services were down or your packaging wasn't at its best.
In other words, they are customers who are loyal to you because you've taken steps to offer them a pleasant experience and retain them.
But to retain customers, you need a strategy: A Customer Retention Strategy.
But before we dive into the strategies, let's talk numbers.
Further reading: 6 Creative Ideas to Boost Your Customer Retention Rate
Did you know that businesses who implemented customer retention strategies saw more sales and bigger growth?
It's true. Stores who grew customer retention by as little as 5% saw their profits grow by 25% to as high as 95%, reports Bain & Company.
Meanwhile, Market Metrics notes that companies have a 60% to 70% bigger chance of selling to existing customers than new ones. This opportunity drops to 5% to 20% when dealing with new customers.
A widely-shared Harvard Business Review stat indicates that customer acquisition is 5 to 25 times more expensive than customer retention.
If you're just starting out, you will need to spend to acquire customers. Because no customers means no business.
The trick is to attract those customers and retain them. You don't want to tell people about your store, have them walk in explore and leave, or buy once and never return.
You want them to look at you as their go-to store for socks, phones, kitchenware – whatever-ware you're selling.
2020 came as more of a smack-in-the-face for businesses. But at the same time, many businesses, especially those with an online presence, were not only able to weather the storm but overcome it and grow.
Other businesses hastened their shift to online, paving the way for potential growth.
That said, there's no doubt that 2020 was a challenging year. Many businesses had to close-shop, while many employees were forced to leave.
Despite this, sectors like e-commerce witnessed growth. Retail e-commerce sales jumped 27.6% in 2020, surpassing $4 trillion, according to eMarketer.
The market research firm had projected that retail e-commerce sales would decelerate to a 16.5% growth mid-pandemic. This data "demonstrates the remarkable extent to which consumers transitioned to ecommerce last year," eMarketer said.
At the same time, total worldwide retail sales (not online) fell 3.0%.
In terms of where e-commerce retail is headed, eMarketer projects a 14.3% worldwide growth in 2021, representing around $611 billion in e-commerce sales.
The research firm expects consumers to "maintain many of their newfound digital behaviors in 2021.”
When thinking about customer retention strategies, you don't have to follow all the strategies all at once.
Although they're quite simple with several strategies overlapping with each other.
Who doesn't love great customer service? The thing is, having good customer service is a simple and easy way to not only help and support your customers but also retain them.
Data compiled by HubSpot shows that businesses lose around $1.6 trillion (yes trillion!) every year because of bad customer experience.
If you have a small team, you can include a chatbot in your online store to help customers navigate problems or queries. Chatbots have developed significantly over the past few years. They're almost human-like.
Getting customer feedback helps you as a store or business owner.
Here's how: By asking customers for their opinions and suggestions, taking them into consideration, and implementing some of them, you're building a relationship with your customers.
Of course, if you're considering asking for customer feedback and throwing it away, we recommend skipping this strategy and moving on to the next one.
Customer lifetime value (CLV) is a metric businesses use to forecast how much a customer is worth during their relationship with the business.
The best way to explain CLV is by giving an example.
Imagine your customer Ben, who spends $100 in your store every month. Over the course of a year, Ben is likely to spend $1,200. If your relationship with Ben expands to 3 years, then you're likely to get $3,600 from Ben during that period.
Now, imagine another customer who spends $50 a month in your store. Naturally, this person's annual spending will be lower than Ben's.
However, if they are likely to have a longer-term relationship with your business than Ben, then they might be a good customer to retain as well.
By calculating how much a customer will spend during the course of their business relationship with you, you'll be able to calculate your CLV and decide which type of customers is better for you and which of them you want to retain.
The next step is to increase that CLV. Increasing customer lifetime value means increasing the length of the business relationship between your customer and your store. It's one of the top customer retention strategies that are worth your time and investment.
If Ben's relationship with your store spans 3 years, then increasing Ben's CLV would be having them as a customer for 5 or even 10 years.
A great way to boost CLV and retain customers is by creating a loyalty program.
In a way, customers now look to experience more than products and services. Having a good experience means they'll want to come back to your business.
Whether you're an online store or a physical coffee shop, or any kind of store, customer experience should be in your arsenal of customer retention strategies.
You see, customers are likely to spend 17% more on products and services in exchange for good experience, says HubSpot. Similarly, brands that are customer-centric tend to be 60% more profitable than companies that aren't. (HubSpot)
A unique customer experience is no difficult feat. It requires some personalization and great customer service.
When a customer feels like they're being cared for, they're likely to stay and buy more.
This has been clear in many reviews given to Gameball. Our customer support and customer success teams have helped customers, who in turn took the extra effort to mention them in their reviews for Gameball.
We've mentioned using bots and offering a good customer experience. Another important thing is: Customers need to feel that you're human.
You might be thinking "but you just said to use bots." Well yes, but there are several ways you can offer a 'human-like experience' while still relying on automation.
Chatbots have come a long way. But that's not the only thing you need.
You want to build a relationship with your customers. A relationship built on trust. When customers trust you, they are likely to buy from you. They may even increase their average order value with your store over time.
Last but certainly not least in your customer retention strategies is rewarding loyal customers.
These are customers you have retained through one or more of the above strategies, or by sheer luck, and now you want to ensure that they are fully-retained and fans of your business.
You can reward customers by providing them with special offers and discounts, free shipping, or double points in certain holidays or shopping seasons.
A great way to manage this and stay up-to-do with your loyal customers is by adding a loyalty program to your store.
Gameball's loyalty programs offer lots of personalization and help you manage the way you reward those happily-returning loyal customers.
Customers today are about personalization and experience. Ten years ago, the situation was different. But you're in 2021 and you need to adapt to changing customer trends and needs.
There are many customer retention strategies out there. But based on our experience as a customer loyalty program software, we found these to be the top 6 most effective strategies.
As you can see many of these strategies overlap in one way or another. Good customer service goes a long way and offers opportunities in creating a customer experience, which in turn translates into a higher CLV.
Do you have questions about customer retention? Do you need help with retaining customers for your business? Feel free to comment below or get in touch with Gameball.
Want to see how a loyalty program can help your store with personalization, customer retention, customer experience, and engagement? Start your free trial with Gameball.