When it comes to driving new revenue, it is much more cost-effective to spend money on improving your customer retention than it is to acquire new customers.
Whether you have super-loyal customers that you want to make sure you retain, or you have a high number of lapsed customers that you want to attempt to re-engage, customer retention can be a highly successful strategy for increasing revenue.
LoyaltyLion says in our most recent guest blog on loyalty that, “on average, 53% of your revenue comes from the top 20% of your most valuable customers, so it’s clear that harnessing the interest and loyalty of these shoppers will positively impact your revenue.”
How can you improve your customer retention rate?
#1 – Implement a loyalty and rewards scheme
The most obvious strategy to improve customer retention and loyalty is to implement a loyalty scheme. However, this is often not the easiest or quickest strategy to put in place.
There are a few options for loyalty schemes such as points-driven programs, tiered programs or events-driven programs. Each has its own benefit but they all work towards encouraging your customers to come back time and time again to engage with your brand, in exchange for some reward.
#2 – Implement a referral scheme
Similarly, you may also want to implement a referral scheme which rewards customers for referring their friends and family.
Not only will this improve your relationship with your customers, but it will also build mini-influencer networks across your customer base.
Whether you offer your customers a % off their next purchase or a £ value discount, this can be a successful strategy that can often be significantly more cost effective than acquiring these new customers through other channels.
#3 – Use email automation to upsell new products
If you have an engaged customer base that has opted-in to your email newsletter, you can use this as an opportunity to use automation to upsell relevant products based on what they have previously purchased.
By sending products that are specifically relevant to them, you can increase your customer retention rate whilst also increasing your on-site conversion rate at the same time.
#4 – Use email automation to re-engage lapsed customers
Email automation can also be a powerful strategy to re-engage lapsed customers too.
An automation series you can set up is for lapsed customers; if a customer hasn’t made a purchase for a set period of time, send them an automated email to encourage them to make a purchase (perhaps with a discount code or special offer).
This can be an easy set up and one that you can continue to run without too much maintenance.
#5 – Use PPC efforts to remarket to existing customers
Another way you can remarket to customers, outside of email, is through your PPC efforts. Through the use of social remarketing or display remarketing, you can set up automated ads to run for previous customers, lapsed customers, loyal customers etc. Most customer groups can be set up to run automatically and to feed into Facebook or Google for your ads.
There is also some more clever stuff you can do with cheaper bids for remarketing lists if you want to take this to the next level.
Customer retention is more cost-effective
Many ecommerce stores initially see customer retention costs as unnecessary, especially when it comes to offering discount codes and special offers.
However, the cost of these offers can be significantly cheaper than your customer acquisition costs across other channels such as influencer marketing or PR.