E-Commerce Customer Retention: How Important Is It?

E-Commerce Customer Retention: How Important Is It?

February 28, 2019

Keeping your current customers current is exponentially easier with a host of e-commerce customer retention tools you can add to your arsenal.

Naturally, keeping your current customers coming back for more is a much easier task than trying to convince new people to buy.

But it’s not as simple as “once they buy once, they’ll buy twice”.

With competitors everywhere fighting for their attention, it’s more important than ever to ensure you have processes and tools in place to encourage repeat processes and grow your overall bottom line.

Why you need to retain your customers

Most people choose to avoid focusing on retention.

In most cases, it’s because the idea of acquisition seems more effective.

E-commerce Customer Retention Statistics

It sort of makes sense. When you see the overall number of customers increasing, it’s no wonder some people put most of their efforts to acquiring new customer for their e-commerce store.

But did you know that by increasing your e-commerce customer retention rates by just 5% you can increase profits by 25-95%.

If that wasn’t enough loyal customers tend to spend more, hence their customer lifetime value (CLTV) increases by as much as 10 times.

And what’s more, a 2% increase in customer retention has the exact same effect as decreasing your overall business costs by 10%.

If you haven’t already considered the benefits of improving your customer retention efforts, the time to start is now.

Focus on product, people and process

Although it’s not a tool specifically, the three P’s of customer retention should be held in high regard.

  • Product
  • People
  • Process

Naturally, when you put your efforts into making the above are good and effective, you improve the way you deliver for your customers and your retention will increase.

Product. It goes without saying (but you’d be surprised how many people consider it an afterthought) without a good product, people just won’t buy again.

Granted, you can use clever marketing to get them to buy initially. But if the product doesn’t match up with their expectations, you won’t have a repeat customer.

People. If you want to be serious about working on your customer retention you need to think about the type of people you target.

If you’re only going after bargain shoppers, are you surprised if they don’t return to buy from you?

The people you target will have a big impact on the number of repeat sales they generate for you.

Process. Getting e-commerce right involves a number of processes working together simultaneously.

You need to handle inventory, you need to handle your website, shipping, returns, delivery etc.

If your processes aren’t in the right way, your customers will become frustrated with your business and seek to buy the same products elsewhere.

Loyalty programme to increase e-commerce customer retention

It’s a no brainer that the more loyal a customer, they more likely they are to buy from you again.

What better way to orchestrate that loyalty through a loyalty programme. A loyalty program gives customers rewards based on completing certain actions.

You get to decide what the actions are, as well as the rewards.

It’s important if you plan to run a loyalty program that you fully understand your customers.

There’s no point requesting your customer spend $5000 to receive 5000 points, but then the points only offer $5 off.

The incentive to join in with the loyalty programme just isn’t there. You can get inspired by these 10 examples of SMB referral programs.

Example of a loyalty programme

North face has a loyalty programme for their customers.

NorthFace's Loyalty Programme

They lay out the joining information clearly.

For every $1 spent on their store, you gain 10 ‘peak points’.

When you’ve amassed enough peak points, you get to decide what you do with them.

What’s more, they don’t just focus on monetary value points.

E-commerce Customer Retention

By joining their community and taking part in official events, you’re able to earn more points. This sense of community building is a great way to increase your customer lifetime value and improve your customer retention.

Loyalty programme tools

When it comes to implementing a customer loyalty program there is a range of software you can use. is a great example of loyalty programme software that understands their customer’s need for varied approaches.

You don’t just have to have a points system, you could adopt a VIP approach or even a referral scheme.

Customer Loyalty Programme

This way you can fully embrace the type of loyalty program that works for you and your e-commerce store – based on the type of customers you sell to.

Personalized content

Customers have more choice in how the shop and where they shop. Because of this, you need to make sure that your customer experience is as personalized as possible.

Your customers need to feel like you value them as a person.

Research by Jarmin shows that 90% of marketers feel as though personalization is the future. You need to make sure you’re one those who actually implement it.

Customer Retention Statistics

Examples of great personalized content within e-commerce

Fashion Nova, clothing retailer uses personalization within their product listings.

Woman Jacket

I searched for this jacket and what most retailers do is simply encourage the sale of that item.

Fashion Nova goes a step further though and helps people complete their look.

This is effective because they truly understand their audience.

They know that if you buy one item, it’s likely you’re going to want ideas for how to pair that clothing item with others.

Fashion Nova Add-on Suggestions

It’s why their suggested add-on feature is so great. Each add-on is tailored to the specific item you’re looking at.

Using this level of personalization not only shows your customers that you value them but can increase your average order value which means more revenue for your e-commerce store.

Personalization e-commerce tools

Using a tool like Nosto you can embed elements of personalization within your store. From onsite product recommendations to onsite pop-ups, you can ensure each visitor feels wanted and valued by you.

E-commerce Customer Retention Tool Nosto

What’s more, using their suite of tools, you could benefit from increased conversions of up to 42%.

Final thoughts

The post aimed to give you an idea as to the different types of tools you can use to boost customer retention.

We’ve recommended products we’ve used ourselves, however, that’s not to say there aren’t others that could work for your business too.

Do some research, see what tools are out there, which match your business model and the ways you can increase customer retention.

Don’t let happy customers go to your competitors, start retaining them today!

What tools or strategies have you implemented in order to retain your customers?

  1. Ashley Marsh
    March 4, 2019

    E-commerce business is not just about growing the business but it also about attracting and acquiring new customers. Retaining customers is just as important. It is also said that the higher a company's customer retention rate, the higher their ROI for marketing campaigns. The tools in this article are very helpful and amazing. I would further like to read more articles from your side.

  2. john smith
    September 21, 2022

    E-commerce business is not just about growing the business but it also about attracting and acquiring new customers. Retaining customers is just as important. It is also said that the higher a company's customer retention rate, the higher their ROI for marketing campaigns. The tools in this article are very helpful and amazing. I would further like to read more articles from your side.

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