In the world of retail, ecommerce or not, the focus will always be on two main metrics – customer acquisition and customer retention. Customer acquisition is a fancy term for attracting new customers while customer retention is a fancy term for ensuring a customer returns and makes another purchase (or a few).
Among people who pay attention to retail-related data, it is a well-known fact that attracting a new customer costs five times more than retaining one. And despite this being such a widely-accepted piece of information, most retail companies, both brick and mortar ones and ecommerce ones, still put the majority of their money and attention into attracting new customers instead of keeping the existing ones loyal.
In the case of ecommerce companies, maybe this makes sense? Maybe ecommerce people know something the rest of us don’t? Maybe they know that there is no such thing as ecommerce customer loyalty?
For instance, a single “retained” ecommerce customer will provide as much revenue for an ecommerce company as 5 to 7 new customers. Or, how about the fact that it is 50% easier to sell something to a returning customer as it is to a new one. On a big picture level, improving your ecommerce store’s customer retention rate by as little as 5% can boost your profitability by anywhere between 25% and 95%. Keep in mind that 5% is a huge deal in customer retention.
It soon becomes very obvious that customer retention is one of the core aspects of running an ecommerce business.
There are a few factors that motivate people to buy online. The first of these is the speed and the convenience of the experience, i.e. not being forced to leave their home. Also, ecommerce stores often offer better prices due to the reduced costs of everyday operation.
Due to its novelty, the ecommerce system is also put under a much more powerful magnifying glass. For example, shoppers are very likely to abandon a purchase or even all future dealings with a store if they are not satisfied with loading speeds, customer service or something else. Furthermore, the lack of person-to-person interaction makes it all but impossible for ecommerce companies to provide a truly personal customer experience that can boost customer retention in traditional stores.
The good news is that ecommerce business owners still have plenty of weapons on their disposal when trying to increase their retention rates. The first of these is getting everything in order website-wise and customer service-wise. Considering that customers end their relationship with a business because of poor customer service in 70% cases, it is naïve to believe that this percentage is any smaller with ecommerce stores.
Loyalty programs are another way to reward the returning customers and feel them appreciated. For most companies, loyalty programs are purely web-based, while there are those who have achieved great results with actual physical gifts and rewards.
Loyal ecommerce customers may be rare, but they are not exactly mythical creatures that only exist in tales of wishful business writers. By employing a lot of common sense and by taking care of the basics, you can do plenty to boost loyalty in your ecommerce customers.
Courtesy of Business2Community
