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5 Effective Customer Retention Strategies

Strategies to improve customer retention.

We’ve explored why developing a strategy to retain our current customers can be just as valuable as finding ways to acquire new ones. We've also looked at what we should measure in order to stay on track. Now, let's outline some tangible ideas you can apply to improve customer retention.

  1. Use customer accounts
  2. Improve your customer service
  3. Start a customer loyalty program
  4. Send engaging emails to customers
  5. Offer a discount or credit to return

1. Use customer accounts

Customer accounts can be a double-edged sword. On one hand, accounts can make repurchasing easier by giving customers instant access to previous orders as well as pre-filled shipping information. On the other hand, customer accounts are often seen as too big of a commitment for new customers.

Because of this, many people choose to checkout as a guest if given the option. So how can you effectively implement and encourage customer accounts while not hindering conversions of first time customers?

The trick is to provide the option to create an account after the first order has been placed.

Using customer accounts to increase retention

If you're on Shopify and your customer accounts are optional, you can send customers direct invitations to encourage them to activate an account after they’ve completed a purchase.

2. Improve your customer support

Support systems help you effectively communicate with your customers and provide them with the right level of support. A support system can help both pre- and post-sale by enabling you, or a customer service rep, to clearly communicate with the customer.

Having a live chat or help desk tool available can turn a customer question into a sale or a customer complaint into a resolution, whether they come in on site, through email, or via social media. Very often, an effectively resolved complaint or problem can turn an unhappy customer into a loyal, repeat customer. And that's to say nothing of the value of customer feedback, which can help you improve your products and your overall shopping experience.

How delight influences customer loyalty

Data suggests that while delight has its place, customers see fast, friendly, and consistent customer service as the gold standard. If you help customers avoid problems and get the most out of your products, you’ll be doing both of you a favor.

Depending on your niche, product mix, and margins, sending a small gift to your best customers can be a great way to remind them to return while adding the element of surprise and delight, which can increase customer satisfaction. Giving an unexpected gift also plays to the law of reciprocity, which refers to our tendency to respond to a positive action with another positive action.

Delight has its place. However, customers see fast, friendly, and consistent service as the gold standard.

For example, in a world where everything is instant and done over the internet, sometimes people just want a change of pace. A handwritten thank-you note is a thoughtful way to show customers you care and can encourage them to come back and purchase from you again.

When something is handwritten, it shows your customer you’ve taken the time to address them personally. This attention to detail will help you stand out from the deluge of automated receipts and one-size-fits-all order confirmation emails. These considerations go a long way and can potentially create a loyal customer for life.

3. Start a customer loyalty program

Loyalty programs, sometimes referred to a customer retention program, are an effective way to increase purchase frequency because they motivate customers to purchase more often in order to earn valuable rewards.

This becomes a profitable exchange for both you and your customers: they get more value each time they shop, and you benefit from their repeat business.

Customer loyalty program

You can encourage customers to continue investing in the program by giving them welcome points when they create an account. When they see how easy it is to earn rewards, they’ll be excited to come back to your store to do it again.

Creating a loyalty program can be as simple as rewarding customers on their second purchase, or after a set dollar figure. Your store reports make it easy to see who your best customers are by dollar value and total number of orders. Additionally, you can opt for automated loyalty apps which can reward your customers for a variety of actions they take in your store. 

4. Send engaging emails to customers

If purchase frequency is the backbone of customer retention, email marketing is the backbone of customer engagement and your retention toolkit.

Emails give you the opportunity to continue building a relationship with your customers before and after their initial purchase. It’s critical that each message you send adds value to your customer’s experience. If it doesn’t, you run the risk of losing them.

Shopify data from Black Friday Cyber Monday also shows that, relative to other sources, email has the highest conversion rate at 4.29%, followed by search in second. It's clear email is a channel that converts.

Conversion order rate for email marketing

A great way to get started is with follow-up emails. A week after a customer’s first purchase, send them an email that says thank you for your purchase. This type of acknowledgement helps customers feel good about their decision to buy from you, and makes your brand more approachable.

You can make this initial email even more impactful by recommending products that complement their initial purchase. Finally, you can even start including customer reviews as well. These endorsements will increase both the value of each recommended product and the customer’s desire to buy.

Customer engagement through email marketing

After this initial follow-up has been sent, you should make sure to send personalized messages regularly. Beard King does this beautifully, sending personalized emails that offer new products or sales every two to three weeks. Making additional product recommendations and sending invitations for upcoming sales and promotions for new products are great ways to keep the conversation going with first-time buyers.

If you have a product that is perishable, consumable, or otherwise needs to be refreshed over time, knowing your products’ lifespan and sending well-timed emails can be the perfect way to bring back dormant customers. This tactic can be particularly effective because ideally, you’ll be delivering the right message to the right person at the right time.

For example, Luxy Hair mentions in their FAQ section that their hair extensions will last three to six months on average, or up to a year depending on wear.

Customer support FAQ

Knowing this, Luxy could set up a series of automated emails to go out after three months, six months, and one year that explain to customers the benefits of a fresh set of hair extensions. These emails would help educate a first-time buyer, keep Luxy top-of-mind, and encourage repeat business, all while providing customers with a great experience.

In all of your post-sale marketing communications, remember to remind customers of why they bought from your brand in the first place. Getting them to come back rests on your ability to show them why an additional purchase is worth their time and money.

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5. Offer a discount or credit to return

Generally, I would tell you to be wary of discounting. When you discount your products you enter a perpetual race to the bottom that conditions customers to expect dropping prices, which ultimately results in a loss of revenue for your store. When margins are tight, discounting is even more of a risk.

However, when discounts are sent to a first time buyer I actually love it! Sending a discount code for their next purchase with a first time order is a great way to nudge them to come back. For this reason, discounting can also be an effective way to bring back customers that haven’t purchased in a while.

You can strengthen that nudge by giving them more than the standard 10% off. When you think of that 20% off as an investment in boosting your repeat customer rate, it sounds a lot more reasonable.

You may also want to experiment with offering credits to use at your store (i.e. $10 towards any purchase) versus a percentage discount (i.e. 10% off any purchase).

Keep customers to grow your business

Your current customer base is the best asset your store has. Customers already know your brand, they know your products, and they appreciate your service.

Focusing your time and energy on improving the experience for this group as opposed to always trying to find new customers can be a powerful way to supercharge revenues for your store. Make customer retention a priority from this day forth!