Why customer retention is the biggest priority for brands right now
Implementing retention and customer loyalty tactics is an essential task for any brand that wants to be successful in 2023. This is because:
1. Acquiring new customers is expensive and time-consuming: It typically costs five times more to acquire a new customer than to retain an existing one.
2. Existing customers are open to more: They’re willing to try new products and services from a brand they already know and trust.
3. Retaining loyal customers can have a positive impact on a brand’s reputation: Satisfied customers are more likely to recommend a brand to their friends and family members. In today’s highly competitive marketplace, customer retention should be the top priority for any smart brand.
If you want your ecommerce store to succeed in 2023, here’s what you need to do now to prepare your store. But first, let’s look at why brands should make retention a top priority in 2023.
Customer acquisition costs continue to rise
As the cost of marketing and advertising continue to rise, so too do the costs associated with acquiring new customers. Customer acquisition costs have been on the rise for several years, and there is no indication that this trend will reverse any time soon.
This is a major challenge for ecommerce businesses, as it becomes increasingly difficult to profit without raising prices. To compete in today’s market, businesses must find ways to reduce their customer acquisition costs – and one way to do this is to focus on retention rather than acquisition.
By keeping existing customers happy and engaged, businesses can encourage them to spread the word about their products or services, helping them reach new customers and negating some of that costly acquisition.
Customers are spoiled with choices and brands to buy from
It seems that everywhere we look, there are more and more choices for consumers to buy from. We’ve become a society that is spoiled with choices, and it has never been easier to find the perfect brand for our needs.
Whether we’re looking for the latest fashion trend or the best value for our money, there are many options to meet our needs. So how can your brand stand out from the competition? You need to drive differentiation by taking the time to understand customers’ needs and working to build emotional connections with them.
Faced with an economic downturn, customers are more picky
In these tough economic times, businesses are feeling the pinch as consumers become more selective about their spending. With household budgets tightening, customers increasingly seek value for money and are less likely to make impulse purchases.
This change in spending patterns is forcing businesses to rethink their marketing strategies and find new ways to attract customers. Many companies are now offering significant discounts and promotions to entice shoppers.
Others are focusing on providing a superior customer experience to differentiate themselves from the competition. Whatever approach they take, businesses need to be adaptable in order to survive in these challenging times.
Loyal customers spend more money
Not all customers are created equal. While all customers are important, loyal customers are especially valuable to businesses. Loyal customers keep returning to make additional purchases.
Because they have already shown a willingness to spend money with the business, they are more likely to make additional purchases in the future. As a result, businesses should focus on winning the loyalty of their customers.
There are many ways to do this, such as offering rewards for repeat business or providing outstanding customer service. By focusing on loyalty, businesses can ensure that their most valuable customers return.
13 strategies to improve customer retention in 2023
If your brand wants to improve retention in 2023, here are 13 tried and true strategies that can help you.
Use integrated SMS + Email retention campaigns
A customer retention campaign is a marketing strategy designed to keep your existing customers from doing business with your competitors. The idea is to keep in touch with your customers and provide them with rewards and incentives that make it worthwhile to stay with you. The mistake most brands make is to run separate retention campaigns through email and SMS.
Instead, they should integrate SMS and email retention campaigns to improve their effectiveness.
This means sending out regular text messages and emails that offer loyalty points updates, invitations to sales events, or exclusive product launches. By keeping your customers informed of their points balance, you’ll increase the likelihood of them coming back to spend those points with you. Additionally, you can use SMS and email retention campaigns to gather customer feedback and learn about their needs and wants.
This information can then be used to improve your products and services, making your business
more customer-centric. Ultimately, by using SMS and email retention campaigns, you can boost customer loyalty and build a strong base of repeat customers.
Build a mobile app
One way to improve customer retention is to build a mobile app, as it provides a convenient and customer-friendly way for customers to interact with your business.
A mobile app can allow you to collect and track customer data as well as helping you quickly and easily connect with customers who have questions or need customer support. By building a mobile app, you can make it easy for customers to stay connected with your business and therefore improve customer retention.
Optimize your loyalty program
One of the best ways to retain customers is to create a loyalty program that offers incentives for repeat purchases. By optimizing your loyalty program for your ecommerce business, you can keep your customers coming back for more.
Many ecommerce merchants are enhancing their loyalty programs and strategies to build more meaningful connections with customers by using emotion to create more human interactions. Loyalty apps such as LoyaltyLion will provide your ecommerce store with a variety of powerful features that will allow you to set up schemes and strategies to help retain customers. They also leverage the power of emotion to help brands build wholesome connections with their customers, and this helps to increase the value that your existing customers have. Here are some tips to get started:
- Make it easy for customers to sign up for and use your loyalty program. The easier it is, the more likely they are to participate.
- Offer a variety of rewards that will appeal to your different customer segments. Consider discounts, free shipping, exclusive access to sales and promotions, and more.
- Keep track of customer behavior and adjust your loyalty program accordingly. Regularly monitor customer activity and make changes to keep them engaged.
- Reward referrals so that you can build trust and reach more customers.
Rewards and referrals schemes are also popular and can be a good way to increase customer retention for your store. They encourage brand loyalty by helping customers to feel valued and important.
In fact, referrals are one of the most effective ways to build trust with your customers. Studies show that people referred by friends and family are 4x more likely to buy than other shoppers. Furthermore, incentivised referrals are, quite obviously, more effective as users will be more likely to take part if they know it will be beneficial for them too.
By following these tips, you can create a loyalty program to help you retain your existing customers and attract new ones.
Focus on relationship marketing
To improve customer retention, businesses need to focus on relationship marketing.
By establishing strong customer relationships, businesses can encourage customer loyalty and repeat business. There are a number of ways to create relationship-based marketing campaigns, such as customer loyalty programs, customer surveys, and customer events.
Additionally, businesses should make an effort to respond to customer feedback in a timely and professional manner. By focusing on relationship marketing, businesses can improve customer retention and create a competitive advantage.
Improve the post-purchase experience with personalized upsell offers and loyalty rewards
The post-purchase experience is a critical part of the customer journey. It’s an opportunity to make a lasting impression and encourage repeat business. There are a few simple ways to improve the post-purchase experience and build customer loyalty.
First, send personalized upsell offers based on the products purchased. This helps customers find complementary products and encourages them to buy more from your company. You can send points balance reminders in the post-purchase emails so that customers can already see what they can redeem and how they can spend it.
Second, offer loyalty rewards for continued business. This way customers can redeem them and benefit from money-off, free shipping, or exclusive access to new products.
Finally, make it easy for customers to contact customer service if they have any questions or problems. By providing excellent post-purchase experiences, you’ll build customer loyalty and keep them coming back for more.
Create retention campaigns for each customer segment
There are many reasons why it is a good business strategy to have solid customer retention campaigns in place for your ecommerce business. For starters, acquiring new customers can cost up to seven times more than selling to existing ones. And that ratio is only going to keep getting bigger as ad costs continue to rise.
To maximize the lifetime value of your customer base, it’s important to create retention campaigns tailored to each customer’s journey. By understanding the needs and preferences of each group, you can develop targeted campaigns that will result in higher rates of customer retention. How? Through segmentation.
Segmentation enables you to send the right message to the right customer at the right time e.g., a customer before they’re likely to churn or a welcome email to a customer who has just signed up to the mailing list but hasn’t purchased yet.
One segment you need to have is a VIP segment (aka a group of your most loyal – and most profitable – customers). According to the Pareto Principle, it’s not uncommon in organizations for 80% of revenue to come from 20% of repeat customers. By knowing who your VIP customers are you can spend your budget more carefully on your most loyal customers. Surprise and delight initiatives such as sending a gift or a discount or even just a personalized note add additional value to the customer and builds brand loyalty.
If you have a segment of customers who are highly engaged with your brand, you might even create loyalty tiers that offer rewards for continued patronage. The more customers spend with you, the higher they move through the tiers, and the more they get rewarded. Alternatively, if you have a segment of customers who only make occasional purchases, you might create a campaign that notifies them right before they churn and entices them back to your store once again.
By taking the time to understand your customers and develop targeted retention campaigns, you can keep them coming back for more.
Offer the best customer service possible
Offering the best customer service possible is essential for retaining customers and ensuring their continued satisfaction. There are a few key ways to offer excellent customer service.
First, it’s important to be responsive to customer inquiries and concerns. This means promptly answering phone calls, emails, and other messages. It’s important to be friendly and helpful. Customers should feel like they are valued, and their business is appreciated.
Secondly, it’s important to go the extra mile to resolve problems and address concerns. This could mean going above and beyond to find an out-of-stock product or finding a creative solution to a customer’s unique problem.
When your goal is to deliver a positive experience to retain your current customers, you must also understand the buying cycle. There are five main steps on the customer journey to identify opportunities for improvement. These include store experience, buying experience, logistic experience, customer support and returning customers.
Start by considering your store experience. Use engaging content and the best on-site functionality to wow your customers and maximize the chances of seeing them again. Deliver relevant content and design it in a way that is visually engaging.
Then look at your site’s user journey. What pages are you suggesting they go to when they land on your site? Have clear indicators, such as banners, that make it easy to move through your store.
To increase the likelihood of a customer returning, your buying experience needs to be the best. But what do you do when they’ve purchased and not come back? Use a loyalty program to incentivize customers to return to your store. Allowing your customers to earn points for actions on- or off-site increases the chances of them remembering you and returning in future.
By offering the best customer service possible, businesses can create loyal, satisfied customers who are more likely to return in the future.
Make returning products easy
It’s important to make it easy for customers to return products. A hassle-free returns policy will show customers that you value their satisfaction, and it will also encourage them to shop with you again in the future.
Another great idea is to work returns into your loyalty program by creating a premium returns service for your most loyal customers in your top loyalty tier. You can drive repeat purchases by advertising ‘free return pickups’ as a top tier perk that members have to work up to, and this will inspire smaller spenders to carry out the necessary actions to achieve this perk.
Create a referral program that’s actually useful
A customer referral program can be a great way to generate new leads and build brand loyalty. However, many referral programs fail to live up to their potential, often because they are too complicated or offer meager rewards. To create a referral program that is actually useful, businesses need to focus on simplifying the process and offering significant rewards.
One way to simplify the referral process is to integrate it with existing customer accounts. This way, customers can easily refer friends and family members without having to remember a special code or sign up for a new account.
Additionally, businesses should offer significant rewards for successful referrals, such as a product discount, store credit, or free products. By making the referral process easy and rewarding, businesses can encourage customers to spread the word about their products and services.
As an example, here’s how Nuud offers customers a useful referral program. When shoppers refer their friends with Nuud’s Happy Plan, Nuud gives the advocate 10% off their next order and the new customer who’s just been referred gets 20% off theirs.
Go all-in on TikTok
TikTok has quickly become one of the most popular social media platforms, with over 1 billion active users worldwide. And it’s not just for Gen Zers – adults are increasingly using the app to consume short-form content on various topics.
For ecommerce businesses, TikTok provides an opportunity to reach a massive audience with creative and engaging content. The key to success on TikTok is to produce content that is entertaining and informative and that highlights your product in a positive light. With TikTok’s vast potential for reach and engagement, businesses that go all-in on the platform can reap substantial rewards.
Work with relevant influencers
One of the best ways to build up your ecommerce store’s online presence is to work with relevant influencers. They can do this by posting about your products or by giving you a shout-out on their social media channels. If you can identify the right influencers to work with, they can be a great way to raise awareness of your ecommerce business and drive traffic to your website.
The goal is to work with influencers that genuinely care about your products. Instead of offering them “one and done” promotional deals, work with them on an affiliate/commission structure, so they’re more likely to keep promoting your products.
Build a community
While there are many strategies businesses can use to improve customer retention, one of the most effective is to build a community. When customers feel a sense of connection to a business, they are far more likely to remain loyal.
There are a few key ways to build community. First, create meaningful interactions with customers. This could involve responding to their comments and questions on social media, or sending personalized emails.
Second, give customers a platform to connect with each other. This could be done through online forums or in-person events.
Finally, make sure to keep customers updated on what’s happening with your business. Tell them about new products, special offers, and anything else that might interest them. And don’t make it a one way street – ask for their feedback too. Getting an idea of why they chose your company or why they still choose you over competitors etc is essential in preventing and reducing churn and increasing your customer retention rate.
A great way of getting qualitative feedback is through one-on-one conversations with your customers, and your community is the perfect space for this to take place. If you have a loyalty program in place, you could even incentivize your customers to share feedback in exchange for loyalty points.
By taking these steps, you can create a strong sense of community that will help improve customer retention.
Focus on improving the omnichannel experience
In recent years, there has been a shift in the way that consumers interact with businesses. With the advent of online shopping, customers now have more choices than ever before.
As a result, omnichannel personalisation is becoming a go-to for most ecommerce merchants. Personalisation across all touchpoints, both online and offline, can be a truly powerful strategy that helps customers stay engaged with your brand. This means creating a cohesive brand identity and ensuring that customer service is consistent regardless of how or where the customer is interacting with the company.
This also extends to advertising and marketing. Wherever your customers see you, they must see you consistently. Compare your offline, Facebook ads, Instagram ads, social media channels and packaging with the visual identity you are portraying online. It should feel like one big family rather than visually independent pieces of content.
While this can be a challenge, businesses that get it right will be rewarded with loyal, satisfied customers. Investing in an omnichannel customer experience is therefore essential for any business that wants to stay competitive in today’s market.
The importance of customer retention will only continue to grow in the coming years as competition increases and customer acquisition costs soar. By focusing on providing a great experience, you can keep your current customers happy while also attracting new ones. What strategies are you using to improve customer retention?
To learn more about how LoyaltyLion improves the customer journey, schedule a demo with our team.