For anyone who is even slightly involved in e-commerce, this fact will not be news to you: It is up to seven (!) times more expensive to acquire new customers in e-commerce than to retain existing ones.
Through customer loyalty and loyal customers who buy from you more than once, you save your company a lot of marketing costs and minimize the wastage that automatically occurs when acquiring new customers.
Why are we telling you this? Because we're going to talk about retention marketing. The name says it all: this form of marketing deals with how you bind the majority of your customers to your brand - so that they buy from you again. And again. And again. And...
What exactly is retention marketing?
Like so many things in marketing, the term is a broad one. The goal of retention marketing is to keep as many customers as possible happy and to increase the repurchase rate. So that in the end you can look at a bulk of loyal and satisfied customers and reduce your costs for new customer acquisition.
Retention marketing encompasses many different strategies, all of which are aimed at one thing: Long-term customer retention. While new customer acquisition "only" creates a base of customers, customer retention ensures that each individual relationship with each customer is maximized and maintained for as long as possible. These are therefore strategies that provide for the future, not those that bring a quick profit.
To do this efficiently, customer data is often segmented and then addressed separately and individually. This also reduces the churn rate, increases the repurchase rate and - you can already guess - increases customer loyalty.
Who needs retention marketing?
Short question, even shorter answer: All of them. After all, no one can seriously want to spend a lot of money "unnecessarily" when it's much easier, right?
Nevertheless, there are still many companies that can't get enough and want to reach more and more customers instead of continuing to look after the "old" ones. In the long run, however, as described above, this leads to higher marketing costs and the "old customers" turn away from the company in the worst case - no wonder. Because if you feel neglected, your company will be forgotten. Especially in fast-moving industries, it is not uncommon for companies to be changed quickly.
To prevent this from happening in the first place, we urge you (if you're not already doing so) to look at how you can persuade existing customers to buy again. And we don't promise too much when we say: There's a lot you can do. What's more, both your business and your customers will benefit if you make an effort to keep them. Because the basis is already given - everyone prefers to store where he or she already knows his or her way around. If the company is willing to maintain the relationship, nothing can stop the customers from making the next purchase...
What can I do as an e-commerce company?
First of all, if you haven't already done so, you should take care of your Customer Relationship Management (CRM). This is the strategy by which you define, monitor and consolidate the interactions between the company and its customers.
CRM can be seen as the basis for everything that follows. Colloquially, we often speak of a specific CRM - this usually refers to the CRM system. This helps your company to optimize processes and to have an overview of the clientele. In most cases, this tool includes contact and sales management as well as productivity improvement. It can also increase customer lifetime value (CLV).
In a nutshell: Thanks to a CRM system, you can work more accurately and efficiently to make your customers more satisfied in the long term and turn one-time buyers into multiple buyers.
Customer service good, everything good
Okay, admittedly: It's not quite that easy. Nevertheless, your company's customer service is an enormously important factor in retaining customers. It's not for nothing that they say: There is a lot of potential in dissatisfied customers. The reason: Skilled customer service turns previously dissatisfied buyers into fans - ideally.
First of all, the goal of a customer service should be to answer every inquiry as quickly and satisfactorily as possible - and the answers should also be individual... Here, too, a well-chosen CRM system can help you. Also, be sure to include FAQs on your website so you don't have to answer the most frequently asked questions over and over again.
Another advantage for you and the customer: a live chat. In this way, the request is answered quickly and individually. And in the end - hopefully - both parties are satisfied.
When it comes to customer service, it's best to ask yourself first: What would you like? What is not possible? What would scare me off? In most cases, the answers to these questions already contain the solutions for creating a great customer service.
Optimized shipping
You've probably already guessed: This wouldn't be an article about a shipping service provider if we didn't also talk about shipping for a moment ;)
But yes, shipping also plays an enormously important role in customer loyalty in e-commerce. After all, who would order from a company again if he or she had to wait two weeks for the goods? ... Exactly.
Contemporary shipping is all about transparency. Make sure you are in contact with your customers before, during and after shipping. Always let them know where the package is - the best way to do this is with live tracking. Also: It can always happen that a package is delayed - but as long as you let your customers know, it's only half as bad. And many people have been appeased with a charming apology e-mail.
Flexibility, convenient returns, and sustainability are also becoming increasingly important in e-commerce. Because customers' requirements are changing - and we have to keep up. For more information on sustainable shipping in the last mile, click here.
Yes, the customer IS king
The saying may be hackneyed, but it's truer than ever, especially when it comes to retention marketing. If your customer doesn't feel well taken care of, that's it for customer retention.
And it doesn't even have to be elaborate activities. Your customers will already like the possibility of creating a customer account. This way, they have all their orders at a glance and can check the shipping information that has already been filled out. But beware: Many people still choose to order as a guest during the ordering process. Offer them to create an account after they have placed their order and subtly point out the advantages in the confirmation email.
Just as simple, but still effective: loyalty programs or discounts. After all, who isn't happy when he or she gets a 10% voucher just like that? "Because you've been with us for so long". You can also achieve a lot with loyalty points. For example, show your customers what they get for how many points - and also show them how they get points. Ideally, this will increase the repurchase rate.
How do I measure customer loyalty?
Like so many things, retention marketing is also heavily numbers-driven. Of course, you can "just do it" in the beginning - but if the numbers don't add up, it won't do you much good. Here is a brief overview of the most important KPIs:
- Repeat Customer Rate: The repeat customer rate lets you know what proportion of your customers have made at least two purchases within a certain period of time. The repeat customer rate is given as a percentage and gives you a good first insight into customer loyalty and satisfaction. You can define the time period yourself.
- Purchase Frequency: This is the number of purchases made by a particular customer within a period of time. Most of the time we look at the purchase frequency in 12 months to include different actions. The numbers allow you to better understand the buying behavior and align future communication accordingly.
- Average Order Value: The name says it all - thanks to these figures, you can find out how much a customer spends on average per order. If you manage to increase this figure, it will also be reflected in your sales. Now that's motivation, isn't it?
Of course, there are other KPIs you can consider and work with. However, these three are pretty good to start with.
Conclusion
Nowadays, nothing works in e-commerce without customer loyalty. We dare to put forward a bold (?) thesis when we say that anyone who doesn't take proper care of their customers is not fit for the future. In addition to regular e-mails written in the customer's language, personalizable accounts or loyalty programs, shipping also plays a major role - after all, parcelLab calls it the "key to customer loyalty".
Unfortunately, even today little value is placed on proper, sustainable shipping and good post-purchase communication. After the customer has clicked on the "Order" button, it's time for updates, shipping confirmations, and so on. How exactly you can optimize this communication, you can read here.
And that's exactly why we've made it our mission with Liefergrün to get the most out of last-mile shipping: with live tracking, time window deliveries and customer support that responds within 10 minutes. In this way, we have already strengthened one or the other customer loyalty... Yours too?
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