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9 Customer Retention Strategies & Examples To Drive Customer Loyalty

9-customer-retention-strategies-&-examples-to-drive-customer-loyalty

Social media platforms are pushing brands to pay to reach their audiences. A surge of new businesses also means increased competition. As a result, it’s getting more expensive to acquire new customers.

Build a sustainable ecommerce business by turning an existing customer into a repeat purchaser. It’s a strategy that will help you make more money and increase profits—especially considering that, while repeat customers account for only 21% of customers, they generate 44% of revenue and 46% of orders.

Unsure where to start? This guide shares nine customer retention strategies that convince first-time customers to become loyal fans.

The 9 best customer retention strategies that work

  1. Use customer accounts
  2. Improve your customer support
  3. Start a customer loyalty program
  4. Send engaging emails to customers
  5. Offer a discount or credit to return
  6. Collect customer feedback
  7. Perfect the returns process
  8. Offer a subscription service
  9. Turn unhappy customer complaints into resolutions

1. Use customer accounts

Customer accounts can be a double-edged sword. On one hand, accounts can make repurchasing easier by giving customers instant access to previous orders as well as pre-filled shipping information. On the other hand, customer accounts are often seen as too big of a commitment for new customers.

Because of this, many people choose to checkout as a guest if given the option. So how can you effectively implement and encourage customer accounts while not hindering conversions of first time customers?

The trick is to provide the option to create an account after the first order has been placed.

 An automated email that invites online shoppers to create an account after their first purchase.
Use email marketing automation to invite first-time customers to create an account.

If you’re on Shopify and your customer accounts are optional, send customers direct invitations to encourage them to activate an account after they’ve completed a purchase.

2. Improve your customer support

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

Data suggests that while delight has its place, customers see fast, friendly, and consistent customer service as the gold standard. If you help customers avoid problems and get the most out of your products, you’ll be doing both of you a favor.

Depending on your niche, product mix, and margins, sending a small gift to your best customers can be a great way to remind them to return, while adding the element of surprise and delight, which can increase customer satisfaction. Giving an unexpected gift also plays to the law of reciprocity, which refers to our tendency to respond to a positive action with another positive action.

Graph showing the biggest impact on retention with product education, good service, and product updates ranked top.
Product education and consistently good service are the two main drivers of customer retention.

Delight has its place. However, customers see fast, friendly, and consistent service as the gold standard.

For example, in a world where everything is instant and done over the internet, sometimes people just want a change of pace. A handwritten thank-you note is a thoughtful way to show customers you care and can encourage them to come back and purchase from you again.

When something is handwritten, it shows your customer you’ve taken the time to address them personally. This attention to detail will help you stand out from the deluge of automated receipts and one-size-fits-all order confirmation emails. These considerations go a long way and can potentially create a loyal customer for life.

3. Start a customer loyalty program

Customer loyalty programs, sometimes referred to as customer retention programs, are an effective way to increase purchase frequency, because they motivate customers to purchase more often in order to earn valuable rewards.

This becomes a profitable exchange for both you and your customers: they get more value each time they shop, and you benefit from their repeat business.

Loyalty program that allows customers to redeem rewards when they purchase through Nerdy Nuts’ website.
Nerdy Nuts’ loyalty program rewards customers each time they make an online purchase.

Encourage customers to continue investing in the program by giving them welcome points when they create an account. When they see how easy it is to earn rewards, they’ll be excited to come back to your store to do it again.

Creating a loyalty program can be as simple as rewarding customers on their second purchase, or after a set dollar figure. Your store reports make it easy to see who your loyal customers are by dollar value and total number of orders. Additionally, you can opt for automated loyalty apps, which can reward your customers for a variety of actions they take in your store.

4. Send engaging emails to customers

If purchase frequency is the backbone of customer retention, email marketing is the backbone of customer engagement and your retention toolkit.

Email marketing gives you the opportunity to continue building customer relationships before and after their initial purchase. It’s critical that each message you send adds value to your customer’s experience. If it doesn’t, you run the risk of losing them.

Shopify data from Black Friday Cyber Monday also shows that, relative to other sources, email has the highest conversion rate, at 4.29%, followed by search in second. It’s clear email is a channel that converts.

Email marketing has a 4.29% conversion rate compared to 3.04% for search, 2.93% for direct traffic, and 1.81% for social media.
Email has the highest order conversion rate of any marketing source.

A great way to get started is with follow-up emails. A week after a customer’s first purchase, send them an email that says “Thank you for your purchase.” This type of acknowledgement helps customers feel good about their decision to buy from you, and makes your brand more approachable.

Make this initial email even more impactful by recommending products that complement their initial purchase. You can even include customer reviews—endorsements that will increase both the value of each recommended product and the customer’s desire to buy.

Email form Beard Knight announcing its new beard oil with a 20% discount code.
Beard Knight emails a subscriber-exclusive discount code whenever they launch a new product.

After this initial follow-up has been sent, send personalized messages regularly. Beard King does this beautifully, sending personalized emails that offer new products or sales every two to three weeks.

Making additional product recommendations and sending invitations for upcoming sales and promotions for new products are great ways to keep the conversation going with first-time buyers.

“There is no longer an excuse not to personalize the purchasing experience for each and every one of your clients, because modern technology has made it so much simpler to do so.”

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

For example, Luxy Hair mentions in its FAQ section that its hair extensions will last three to six months on average, or up to a year, depending on wear. 

Luxy Hair explaining that its hair extension lasts up to one year.
Luxy Hair’s answer to a frequently asked question.

 Knowing this, Luxy could set up a series of automated emails to go out after three months, six months, and one year that explain to customers the benefits of a fresh set of hair extensions. These emails would help educate a first-time buyer, keep Luxy top-of-mind, and encourage repeat business—all while providing customers with a great experience.

In all of your post-sale marketing communications, remember to remind customers of why they bought from your brand in the first place. Getting them to come back rests on your ability to show them why an additional purchase is worth their time and money.

5. Offer a discount or credit to return

Discounting comes with a word of warning. When you discount your products, you enter a perpetual race to the bottom that conditions customers to expect dropping prices, which ultimately results in a loss of revenue for your store. It’s even more of a risk when margins are tight.

However, sending a discount code for an existing customer’s next purchase is a great way to improve your customer retention rates. Some 83% of people look for discounts before making an online purchase, making it an effective way to bring back existing customers that haven’t purchased in a while.

Strengthen that nudge by giving them more 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 want to experiment with offering credits to use at your store (i.e., $10 toward any purchase) versus a percentage discount (i.e., 10% off any purchase). Harney & Sons Fine Teas, for example, gives existing customers a $10 discount code to use on their next order, regardless of what they buy from its online store.

Purchase confirmation email from Harney & Sons, which contains a $10 coupon code for their next purchase.
Harney & Sons gives existing customers a time-sensitive discount code on their next order of $50 or more to reinforce urgency. Source: Really Good Emails

6. Collect customer feedback

Customer research doesn’t end once you’ve built your buyer personas.

Why did people buy your product in the first place? What do they need next? Find the answers by analyzing customer data and segmenting people who haven’t bought in more than three months. Run customer surveys, then give them content that suits their needs and encourages another purchase.

Let’s put that into practice and say 60% of one-time customers didn’t purchase again because they haven’t used the last item they bought. Enter these people into an email marketing series that focuses on product education. Walk them through:

  • Use cases of the product they’ve already bought
  • The benefits of using the product (in case they’ve forgotten)
  • Customers who’ve used the same product and the difference it’s made to their life

Take Mack Weldon customers, for example, who receive a feedback email after making a purchase. The item they purchased takes front and center with a “click to rate” widget, seen below.

There’s also a personalized product carousel to close off the email. People see similar products other customers bought alongside their star rating, reinforcing the idea of another purchase—especially if they’re happy with their first. 

Email from Mack Weldon showing the item a customer bought with a five-star rating system and product recommendation wheel.
Mack Weldon collects customer feedback and gives personalized product recommendations based on their previous purchase. Source: Really Good Emails

7. Perfect the returns process

The returns process makes or breaks your customer retention strategy. Give customers a great experience and they’ll return to buy again. Give an unsatisfied returns experience and 57% of shoppers won’t be back.

Workaround this issue by perfecting the ecommerce returns process. Create a policy that explains what does (and doesn’t) qualify for a return. Some 67% of people check a retailer’s returns policy before ordering. Avoid falling short on customer expectations by clarifying these details upfront.

Alternatively, partner 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. It’s this kind of self-help customer service that two in five shoppers prefer.

Top aspects of a return experience that stops customers from buying again, with the fear of the same scenario ranking top.
58% of customers who’ve had a negative returns experience won’t buy again because they fear the same will happen again.

8. Offer a subscription service

Subscriptions lock people into purchasing items every month. They provide recurring revenue for your business while also keeping existing customers engaged. Plus, locking customers into a subscription can provide excellent experiences that customers want to stay involved in.

The best part: You don’t have to make a subscription service your entire business model. Consider a standalone subscription box that sells miniature versions of your bestselling products.

Jill & Ally, for example, convinces people to make more than one purchase through its crystal candle club. Generous discounts increase based on subscription frequency, designed to entice first-time customers to purchase more often. There’s also the lure of early access to new products, exclusive sales, and surprise items.

Once they’re subscribed, customers authorize Jill & Ally to bill their payment card according to their chosen subscription schedule. They need to actively sign into their account and pause or cancel a subscription, making customer retention the default.

Candle subscription box product page, with twice-monthly shipments highlighted.
Jill & Ally encourages shoppers to make repeat purchases by defaulting to a twice-monthly subscription box. 

9. Turn unhappy customer complaints into resolutions

Unfortunately, things go wrong throughout the customer journey. Shipments can be delayed, products damaged in transit, or incorrect items arrive. Own those mistakes (even if your brand isn’t to blame) and turn unhappy customers into loyal ones through great customer service.

It plays on the service recovery paradox—recovering from a mistake can build more goodwill with customers than what you started with.

“We are all human, and we all make mistakes. Is it fun to admit you messed up? Of course not. But when you do, apologize. Take ownership of what happened, and communicate how you will make it right, or change things going forward to prevent it from happening again.”

Graph showing how customer loyalty increases when you resolve a customer service failure.
Customer loyalty is higher when you experience and recover from service failures.

Let’s put that into practice and say you have an unhappy customer who’s complaining that their order arrived damaged. While the blame technically falls with your courier, own the mistake. Give a sincere apology, ship a free replacement, and explain what you’re doing to prevent the issue from happening again.

Use a customer relationship management (CRM) tool to manage these interactions. The tools below integrate with your Shopify store to provide a real-time stream of customer data:

Customer retention strategy examples

elph ceramics

Elph ceramics has an online store that runs parallel to its brick-and-mortar locations. Managing customer data across various sales channels was confusing. So, it enlisted the help of Shopify POS to deliver seamless customer experiences, regardless of their shopping channel.

Elph ceramics can now unify its customer data—including emails and purchase history—in one back end, making it easier to send retention emails that convince customers to buy again.

The result? A 25% increase in its customer database and a 30% higher customer retention rate.

Customer tapping elph ceramics’ in-store POS display to make a contactless payment.
Elph ceramics uses Shopify POS to merge customer data across all sales channels.

Splash Wines

The Black Friday Cyber Monday weekend is the busiest shopping season of the year. But instead of focusing solely on acquisition, Splash Wines went into the event with a customer retention strategy in action.

“We have customers reorder about 40% of the time, and they reorder an average of 5 or 6 times with us, so it’s a very strong point of pride for us as a company. So, when we get an influx of customers like we do on Black Friday and Cyber Monday, we’re always thinking of new ways to try and retain those customers.”

Splash Wines used Recharge to build a subscription model that allowed BCFM customers to “lock in” their discounted price throughout the holiday season. It used historical purchase data to schedule subscription-related email campaigns around key order dates—when people typically finish their first bottle of wine.

This strategy helped Splash Wines achieve a 177% year-over-year increase in Cyber Weekend sales. Some 40% of those customers purchased more than once.

The Honest Kitchen

The Honest Kitchen already had a customer loyalty and subscription program to improve retention, but it had no way for existing customers to redeem points on its subscription orders.

Plus, because its target market considers its products an investment in their pet’s health, The Honest Kitchen needs to continuously educate customers—even if they’ve already made a purchase.

It employed the help of Yotpo to solve these issues. The Honest Kitchen uses Yotpo to deliver personalized educational content based on the pet they have, its weight, and any allergies it needs to consider in the food they buy. The retailer also automatically populates a rewards page based on each customers’ previous purchases.

After implementing this personalized approach, opt-in rates for The Honest Kitchen’s referral program rose to four times the industry average. Leanne Pratt, its digital marketing and ecommerce manager, adds, “I’ve definitely seen customers who are inclined to explore new products, because there’s less of a risk if they’re using reward points.”

Improve your customer retention rate today

Your current customer base is the best asset your store has. Customers already know your brand, they know your products, and they appreciate your service.

Focus your time and energy on improving the experience for this group (as opposed to always trying to find new customers). Provide excellent customer service, use a marketing automation solution to check in with first-time customers, and monitor customer retention KPIs to keep your strategy on track.

Retaining customers can be a powerful way to supercharge revenues for your online store. So, make your customer retention strategy a priority from this day forth!

Customer retention strategy FAQ

What are examples of customer retention strategies?

  • Offer a discount for returning customers.
  • Run retention email marketing campaigns.
  • Encourage customers to join a subscription program.
  • Create a loyalty program.
  • Improve your customer support.

What are the top 3 keys to customer retention?

  1. Sell high-quality products and services.
  2. Exceed customer expectations.
  3. Actively encourage one-time customers to buy again.

How do I keep my customers coming back?

  • Show appreciation.
  • Resolve customer complaints quickly.
  • Offer discounts or coupons.
  • Send post-purchase emails.
  • Make the returns process stress-free.

Why is customer retention important in ecommerce?

  • It reduces customer acquisition costs.
  • It increases average order value.
  • It builds better relationships with customers.
  • It increases customer lifetime value.

This originally appeared on Shopify and is made available here to cast a wider net of discovery.

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