Profitable ecommerce websites understand that investing in their existing customers is no less important (and sometimes more so) than acquiring new customers and driving new traffic to the site.
It is likely that happy and satisfied customers, those who already know your business and liked your products, will continue to purchase from you again and again if you just remind them of your existence and give them motivation to buy from you again; in practice, these are much cheaper and simpler actions than convincing a new potential customer to buy from you for the first time.
This field is called customer retention, and in the context of online marketing, it is known as retention marketing. In this article, we will talk about what retention marketing is and see how every store owner can, using simple actions, increase the retention rate and profitability on the site.
What is retention marketing and why is it important?
Retention marketing is essentially the ability of your business to make customers return again and again. Your customer retention rate is calculated by the number of customers you have left after a certain period minus the number of customers at the beginning of the period, divided by the number of customers you had at the beginning of the measurement period. Later, this percentage can also be used to track the number of new customers making repeat purchases versus the number of “on the fence” customers who simply don’t buy from you a second time.
Data shows that a 5 percent increase in retention leads to a 40-50% increase in site profitability; additionally, the return on investment in marketing to an existing customer generates an ROI that is 7 times higher than investing in bringing in a new customer.
Recommended retention marketing processes
In this section, we have collected several recommended retention processes for you, which anyone can easily implement on their site, at zero or fairly low costs:
Post Purchase Upsell
If you have an online store, you might already know that conversion rates in ecommerce are usually quite low, so when a visitor already converts and becomes a customer – it’s important to try to get the most out of them and try to increase their order value immediately upon completing the purchase – they already have their credit card ready, they are in the mood for online purchases, and they are in a state of high readiness for online shopping.
The way to do this is to use a method to increase sales called post purchase upsell (an additional sale after purchase). We do this using infinitycrowd – a plugin that allows generating additional sales after the purchase in an automated and personalized way.
The advantage of using a post-purchase upsell is that it does not hurt the customer’s original sale, as it is presented to the customer only after they have paid for the original order.
These upsells are usually presented on the thank you page or in an immediate SMS that the customer receives after the purchase.
Bounce Back Email
Bounce back emails are emails sent to customers who purchased from you for the first time. This is a simple trigger defined in the email marketing system for customers who purchased from you for the first time, with the goal, of course, of getting them to buy from you again. In this email, it is customary to thank the customer for the purchase and offer them additional products at a discount for a limited time.
In this context, our recommendation is to offer your new customers not only products that are “good” and bestsellers, but primarily products on which your profit margin is high. This way you can improve the profit margins from the products sold.
When planning a bounce back email, it is important to try to automatically match it to products the customer has already purchased, to offer mainly products that are profitable for you, and to make it clear to customers that this purchase will be added to the previous purchase so they can save on shipping fees, and of course limit the validity of the offer to a few hours only (until the original order ships).
Personalized Email Marketing
One of the principles of retention marketing is to remind your customers as much as possible that you exist. If they liked your product and it is a good and high-quality product – there is a high chance that they will indeed buy from you again. Especially if they encounter an offer that interests them, and if they encounter such offers from you more than once – the chance that they will purchase again increases even further.
Therefore, the goal of retention marketing via personalized emails is to send your customers emails based on the products they purchased in the past, thus creating a foundation of opportunities to send hot offers and deals that will be relevant and interesting to them.
Unlike the emails you send to your entire list on a regular basis, it is important to build automations with targeted offers that fit each customer according to what they purchased from you in the past and according to the data you have on them. Email marketing and such automations exist in almost every email marketing system adapted for ecommerce.
SMS Marketing
SMS marketing is one of the most powerful advertising channels and one of the most successful ways to maintain contact with your customers – especially if you know how to do it right.
The advantages of SMS marketing are, first, very high open and engagement rates, and second, the ability to send several different types of messages to existing customers based on their past purchases or other information you have about them.
Here are a few examples of different types of uses you can make via SMS messages:
*Sending an SMS message on their birthday: SMS messages sent to your customers on their birthday containing a greeting and a special discount for a purchase on the site. These SMS messages are sure not to annoy your customer, and it is even very likely that they will cause them to purchase something. People love it, and most importantly – it helps you stay in touch with your customers and helps you get them to interact with you.
*Sending a personalized SMS message based on a specific product the customer purchased: Another example of SMS marketing is when you want to market a product whose purchase is regular and recurring. Let’s say a hair serum that we know takes about two months for most women who use it regularly to finish the bottle. With this knowledge, we can set up a recurring SMS to those customers who purchased the serum. The message will be automatically scheduled two months after the purchase and will remind the customer to purchase a new serum – it is recommended to attach a discount, free shipping, and a coupon code to the SMS message, in order to further increase the chances of a sale.
*Sending a message aimed at bringing back past customers who haven’t purchased from you for a while: Sending a message to customers who haven’t purchased from you for a certain period, say a year or half a year. Send them a message to their mobile phone reminding them that you haven’t heard from them in a long time and also attach an attractive discount; this will ensure the possibility that those customers will buy from you again.
Using Positive Reviews
There is no doubt that reviews of the products you sell on your site are a very important aspect that has a great influence on motivating new customers and other existing customers to make a purchase. To increase the number of reviews on your site, we recommend asking your past customers to leave you a positive review, and offering them in return a discount on their next purchase on your site (you can make the discount valid for a limited time).
With the help of your existing customers leaving reviews on your site, you will increase the number of positive reviews on your site and thus be able to increase the conversion rate and purchases on the site and in addition, you can also get your past customers to buy from you again.
This is a double win, so it is highly advisable to adopt this strategy. Write an email or SMS message to your past customers and ask them to leave a review on one of the products they purchased, and in exchange, offer them a discount on their next purchase.
About the author:
Uriel Matzliach, CEO of the ecommerce agency SaleXpress, and founder of the startup infinitycrowd
