Nine Customer Retention Strategies to Drive Customer Loyalty

As social media arenas and platforms become more cluttered and pay-to-play, businesses and brands not only face stronger competition in trying to reach their desired audiences but also more expensive advertising and customer acquisition costs.

To build a more sustainable e-commerce business, it’s imperative to convert both new and existing customers into repeat purchasers. Considering repeat customers generally account for only 21% of customers but generate 44% of revenue and 46% of orders, employing this strategy can help retailers better manage costs and increase profitability.

Shopify recently shared nine customer retention strategies to help turn first-time customers to become loyal fans. Here are the highlights:

1. Leverage customer accounts

Though some consider customer accounts to be a double-edged sword – as can make repurchasing easier by giving customers instant access to previous orders as well as pre-filled shipping information or be seen as too big of a commitment for new customers, leveraging them can go a long way in improving customer retention.

By allowing people to checkout as a guest, and then offering them the option to create an account after their order has been placed, you can effectively implement and encourage customer accounts without  hindering conversions of first time customers.

2. Prioritize your customer support

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

Delivering fast, friendly, and consistent customer service is the gold standard; helping customers avoid problems and assisting them with product usage, recommendations, and questions help increase their affinity for your company.

Depending on your niche, product mix, and margins, sending a small gift to your best customers can also be a great way to remind them to return. Handwritten thank you notes are also an easy, cost effective way to show your customers you appreciate their business and increase both their loyalty and likelihood of them purchasing from you again

3. Create a customer loyalty program

Customer loyalty programs, sometimes referred to as customer retention programs, are an effective way to increase purchase frequency as they entice customers with valuable rewards and motivate them to purchase more often. These programs are mutually beneficial as customers gain more value each time they shop with you and repeat business helps you improve profitability.

To encourage customers to continue investing in the program, consider giving them welcome points when they create an account and at various milestones such as second purchases, holidays, birthdays, or order size thresholds.

4. Leverage email marketing

Effective email marketing campaigns are a critical component of customer engagement and retention strategies as they give you the opportunity to continue building customer relationships before and after initial purchase(s). The key is to deliver timely messages that add value to your customer’s experience. If it doesn’t, you run the risk of losing them.

Shopify data from Black Friday to Cyber Monday showed that, relative to other sources, email has the highest conversion rate, at 4.29%, followed by search. Consider sending follow-up emails a week after a customer’s first purchase and make it more impactful by recommending products that complement their initial purchase.

After this initial follow-up has been sent, send personalized messages at 2-3 week intervals and include customer reviews, information about new products or incentives, or upcoming sales or promotions.

If you have a product that is perishable, consumable, or otherwise needs to be refreshed over time, sending well-timed emails that correspond with your products’ lifespan 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.

5. Extend offers to return customers

While discounting your products may condition customers to expect dropping prices, which ultimately results in a loss of revenue for your store, sending a discount code for an existing customer’s next purchase is a great way to improve your customer retention rates. As 83% of people look for discounts before making an online purchase, this can be an effective way to bring back existing customers that haven’t purchased in a while.

To increase the likelihood of purchase, offer a discount greater 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 consider offering credits to use at your store (i.e., $10 toward any purchase) versus a percentage discount (i.e., 10% off any purchase). 

6. Actively solicit customer feedback

Getting to know your customers and soliciting their feedback about purchases can give you invaluable insight into your target market. Why did they buy your product in the first place? What do they like about your products or brand? What other products (or services) may they be interested in purchasing from you?

7. Perfect the returns process

It should come as no surprise that the returns process can make or break your customer retention strategy. Providing customers with a great experience helps ensure they will purchase again; make the returns process unsatisfactory and an estimated 57% of shoppers won’t be back.

By establishing a policy that clearly explains what does (and doesn’t) qualify for a return, you are better able to avoid dissatisfaction. An estimated 67% of people check a retailer’s returns policy before ordering so it is imperative to establish clear parameters. You may also consider partnering with a returns partner like Loop Returns or AfterShip. Both platforms allow you to build an online portal where people can generate shipping labels, track their return, and request exchanges—all without draining your customer support resources.

8. If possible, offer a subscription service

Subscriptions are the most effective way to ensure people purchase your products at regular intervals. They also provide recurring revenue for your business and increase customer engagement.

9. Deliver stellar customer service and offer resolutions

Despite your best efforts, things can inevitably go wrong during the customer journey – shipments can be delayed, products damaged in transit, quality control may fail, or incorrect items may be sent. When this happens, it’s best to own your mistakes (even if your brand isn’t to blame) and provide a timely resolution. Doing so can turn an unhappy customer into a loyal one! Even if the mistake was out of our hands, offering a sincere apology and resolving the issue to the customer’s satisfaction can turn a negative experience into a positive one and increase brand loyalty.