Any e-commerce business’ success depends on how it can attract and keep customers. Customers equate to sales, and the more satisfied customers you have, the more sales your e-commerce store will be able to make.
The question is what you should focus on – customer retention or customer acquisition? If you are unfamiliar with the terms, customer acquisition is attracting new customers while customer retention is making sure that your past and existing customers come back for more.
The answer to this question isn’t black and white.
Data shows that 80% of your income will come from 20% of your existing customers. About to overhaul your marketing efforts and switch to only marketing to your existing customers?
Not so fast!
If you can earn 80% of your profits from only the fifth of all of your customers, imagine how much more you would sell if you had more total customers and focused more on retaining them!
So, ideally, you should continuously focus on both attracting new customers and retaining existing ones. However, if you haven’t yet focused much on customer retention, here are a few more reasons why you should.
Why You Should Focus More on Retaining Existing Customers
1. Customer Retention Is More Cost Efficient
If you are channeling money into advertising, then you most likely know that attracting new customers costs money and can turn out to bet rather expensive. In fact, it can be five times more expensive to acquire a new buyer than keep an existing one.
As a result, your ROI (return on investment) is much higher. You invest five times less on existing customers; therefore, all the remaining money goes into your profits.
2. Returning Customers Spend More
Not only are customers easier to keep than attract, but returning customers also spend more. They spend on average 31% more than new customers.
3. Returning Customers Are More Likely to Try New Products
Returning customers are 50% more likely to buy new products from you. So, whenever you add new items to your inventory, marketing them to your existing customers can result in higher profits than offering them to people who’ve never bought from you before.
4. You Have a Higher Chance of Selling to Returning Customers
Existing customer trust you and know what to expect from your product. As a result, the chances of you selling to them is higher than to new customers. Data shows that your likelihood of selling to your existing customer is 60-70% while only 5-20% of new customers will buy something from you.
5. You Can Increase Your Overall Revenue
Because of all of the above, you il be able to save more on your marketing efforts and gain more form sales if you direct more of your efforts into customer retention.
As a matter of fact, by increasing customer retention by as little as 5% you can almost double your profits. Studies have shown an increase in profits by 25-95% by keeping only 5% more of your existing customers.
5 Strategies to Retain Existing Customers
Now that you know why and are eager to make some changes to your marketing approach, let’s take a look at what action steps you should consider.
1. Provide Excellent Customer Support
Outstanding customer support is vital when dealing with any customer. However, you should treasure your existing customers and provide excellent customer support to them.
This will include things like:
- Answering buyer queries and doing so promptly,
- Effectively dealing with complaints,
- Adhering to a solid return strategy,
- Providing a variety of customer support methods, such as a useful FAQ section, email support, Live Chat and similar.
2. Provide Special Discounts and Customer Loyalty Programs
While your products should be the main reason for buyers to come back to you, you can always give them more reasons to choose you over your competitors. One such way is by providing exclusive discounts or offers. For instance, provide free shipping for all your returning customers or offer special discounts for their birthday or other holidays.
Another great way is by establishing loyalty programs. For example, let your buyers collect points and redeem them the next time they buy from you. Alternatively, you can also set up an affiliate program and reward your customers for bringing new customers on board.
This will require you to forfeit a fraction of your profits, but it will be worth it in the long run. Don’t forget that returning customers are cheaper to retain, they are more likely to spend, and they spend a lot more.
3. Improve Your Content Game
Trust is paramount for you to make sales and one way of establishing trust and showing your audience that you know your niche in and out is by educating your audience and providing them with useful information.
If your e-commerce website does not have a blog, then you should most definitely consider setting one up. It will not only help you establish a trustworthy online presence, but will also improve your website’s SEO, and will help attract more organic traffic.
Some other ways that you can consider are offering a free webinar or an e-book in exchange for their email. You can use their email to send educational emails, information on any discounts, promotions and any other valuable content.
4. Listen to Your Customers’ Feedback
Like any business, you most definitely will hear complaints at some stage. While some criticism will be hateful and unwarranted, you will be able to extract valuable information from constrictive criticism.
Therefore, it’s importan to keep an eye on you customers’ feedback and actually act on it when their complaints are warranted.
5. Engage with Your Customer
If your customers buy your product and never hear anything from you, you will likely not be at the forefront of their mind. However, you can easily change that by engaging with your customers.
You can do that by keeping an active social media presence of your e-commerce store. Make sure to respond to your customers’ messages, comments, and inquiries in a timely manner.
Nurture your existing customers and they will make sure that your e-commerce business prospers.
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