Customer retention is crucial for an online business, how difficult it may be. And part of what makes it challenging to execute successfully is implementing the right strategies. In fact, Shopify has mentioned that one of the main difficulties of customer loyalty is knowing when to focus on customer retention and what metrics should be used to measure it.
Often, business owners are stuck with how to optimize their customer retention strategies. They forget that there are factors that affect their strategy and that customer retention can be measured.
No wonder customer retention is challenging for businesses. And that’s why you’re here. You want to improve with what you’re already applying.
Customer Retention: When and How to Measure It
Customer retention strategies depend on what stage of operations your online store is. In general, there are four: start-up, gaining sales, consistent sales, and a well-established store.
If you’ve only opened up your store, you can’t apply customer strategies yet. Your focus is to grow your customer base. If your store is slowly starting to gain customers, say two to six on a weekly basis, you’ll begin to use retention strategies, though not robust. If this weekly customer base is becoming consistent, or your sales are becoming the norm, it’s time to ramp up your retention efforts. Now you’re getting heated up.
Maintain the momentum until your store becomes established. It is during this time that your sales are counted daily. It would help if you also focused half of your efforts on customer retention while continuing customer acquisition during this time. By the time your store is well-established, with more sales daily, you should vigorously apply more than half of your efforts to retention strategies.
To understand the numbers better, you should know how to measure customer retention. There are three metrics to be measured: repeat customer rate, purchase frequency, and average order value (AOV).
Repeat customer rate measures the percentage of customers who will return to your store. It considers the number of customers who purchased more than once from your store and the number of customers who purchased only once.
Purchase frequency, on the other hand, measures the number of times customers returned to your store. It takes into account the number of orders placed and, again, the number of customers who purchased only once.
The AOV, meanwhile, measures the value of your customers’ purchases. To calculate it, you need to get the total revenue your store earned and, again, the number of orders placed.
Your goal is to increase these metrics to see the value of your customers. Customer value is the metric used to calculate the worth of each customer. Knowing it means you can measure your customer retention efforts. Also, it uses your store’s purchase frequency and AOV to get results.
To increase these metrics, you need to make changes in your strategies. Changes that will make customers loyal to your business.
How to Improve Your Customer Retention Strategies
Each company has different requirements for its customer retention efforts. It is these differences that define the strategies they should implement. But whatever processes a company follows, they can be further improved through the following:
Better Customer Experience
Make it easy for your new and repeat customers to navigate your store. Links to favorite items should be strategically placed, so customers can easily see and click them. In the same way, make the purchase process seamless. It should be just with a few clicks and taps.
Better Return and Refund System
Automate the return process. You can provide a button or link where customers can send a return request. It would be best to use returns management software to streamline the process.
You can also offer store credit, an e-wallet or prepaid system, or a rewards system. You can send refunds through any of these. Ask a customer if they’re interested in gaining store credit or rewards in exchange for a refund. Or, you can send the refund through your store’s e-wallet system.
Better Customer Service
Don’t wait for customers to reach out. Be proactive in this case. Ask them what they need and want. Recommend products based on their past purchases. Use customer feedback to improve what you have to offer. At the same time, respond to comments, feedback, and inquiries.
But, customer service doesn’t just mean responding to customers in your store. According to Inc. magazine, use social media to see what customers are saying about your brand. Respond to their feedback.
Your Main Goal
If you look at these strategies, they focus on what the customer needs. This should be your primary goal if you want to increase customer retention on your online store. Follow these tips, observe the improvements, and strive to maintain what you’ve achieved.