With customer acquisition costs continuing to rise and competition for new customers becoming more fierce, brands are turning their attention to retaining their existing customers and encouraging them to spend more. In 2021, it’s all about nurturing relationships, rewarding shoppers and creating targeted customer experiences to make your best shoppers more valuable.
In this blog post, we’ll be exploring how to retain customers and secure shoppers’ loyalty to your brand.
But first, why the push to prioritise customer retention?
Increasing competition sends acquisition costs soaring
Ecommerce competition is heating up, and fast. The global COVID-19 pandemic has fuelled jaw-dropping ecommerce acceleration, with Shopify Plus reporting 10 years of growth happening in just 90 days at the height of the pandemic in 2020.
With brick-and-mortar retailers being forced to close and people urged to stay at home, ecommerce reached a record high of 16.4% of total global retail sales.
Retail ecommerce sales growth worldwide, by region 2020. Image source: Shopify
More brands than ever before, including legacy wholesalers and deep-pocketed brick-and-mortar giants, are now prioritising ecommerce and fighting for customers’ attention online.
Meanwhile, there’s increasing competition for ecommerce shoppers in new and emerging product categories, such as household essentials, health and personal care.
Plus, the recent spike in cross-border ecommerce is also contributing to increased competition, with no sign of slowing down.
This potent combination has left digital advertising costs spiralling, making it increasingly expensive to acquire new customers.
With this in mind, Forrester Research predicted that B2C marketers will increase their spending on loyalty and retention marketing by 15% in 2021, encouraging repeat purchases from existing customers rather than investing in acquiring new customers.
So, how can you improve your customer retention strategy in order to boost profitability?
How to prioritise your existing customers
Focus on the customer experience
It’s no secret that improving the customer experience can increase retention and help give ecommerce retailers a competitive advantage. This has become a top differentiator in an increasingly crowded ecommerce world.
“The ability to understand your customers’ needs when they reach the site and react with clear, concise and accessible experiences for your target audience has never been so important,” describes Sammy Fraser, Digital Strategy Manager at Swanky.
When it comes to identifying opportunities to enhance customer experience, Amanda Skinner, CRO Consultant at Swanky, has some wise words:
“In 2021, retailers will need to begin to re-learn who their customer is and what their ever-increasing expectations are. The best people to tell you what your customers want are your customers themselves, so ask the right questions and listen to the answers. Gradually adapting the UX to what they want is vital for getting those customers through the path to conversion.”
Of course, the customer experience doesn’t begin and end with your ecommerce store. It includes every touchpoint of the customer journey, with today’s consumers expecting an intuitive, immersive experience across channels and devices.
What are some of the key things that contribute to a five-star customer experience? We could write a dedicated article on each of these factors (and we have in some cases!), but here’s a quick summary.
- An easily-navigable store with advanced search and filtering functionality.
- Optimised product pages that leverage high-quality imagery, layered social proof and clear calls to action.
- A personalised on-site experience, including a tailored point-of-entry for visitors.
- A speedy, streamlined checkout experience with multiple payment options.
- Timely, effective customer service with clear and concise communication post-purchase.
- Fast, free, sustainable shipping.
- A flexible, transparent, customer-centric returns process.
- A unified, responsive experience across all devices, including mobile, desktop and app.
Don’t forget to test any changes you make to your site in pursuit of an improved customer experience. Use a tool like Dynamic Yield to run A/B/n and multivariate tests, and let the data do the talking! Find out more about the role of testing in our ‘Advice in Action’ section later on.
Align with your customers’ values
With conscious consumerism on the rise, we know that today’s customers are more likely to buy from brands that appear to share their values and support similar causes. Not only this, but shoppers are more willing to give their loyalty to retailers they align with.
So, to help build a loyal tribe of patrons this year, think of how you can align with your customer base and show support for causes that are important to them.
You could create opportunities for customers to have a direct, tangible impact on a cause or charity with every purchase, such as donating products as part of a one-for-one initiative (check out online sock retailer Bombas for inspo!). By offering them the chance to give back to a shared cause, customers will feel empowered and will more likely return for repeat purchases.
Alternatively, how about offering rewards for sustainable behaviour, like engaging in clothing recycling programs or returning packaging for reuse? Fashion retailer H&M’s Garment Collection Program is a great example of this sort of initiative. Rewarding customers’ eco-conscious actions is an effective way of increasing customer satisfaction and encouraging brand advocacy. Plus, by offering rewards that inspire purchasing behaviour (like store vouchers), you can give your retention metrics a boost.
Another tried and tested tactic to consider is creating a brand community to unite customers around shared values. Give members a voice in a shared space on your website or social channels, where they can engage with like minded shoppers. The team behind US fashion retailer The Pulse Boutique have done exactly this, creating a hugely popular Facebook group for customers to unite around their love of fashion. Members can interact with each other, share photos of their latest purchases and get early access to new arrivals and sale codes. The group has amassed over 54,000 members, with some seriously impressive engagement.
Comments like this help to create a sense of community and belonging for Pulse customers, nurturing a strong sense of brand loyalty.
Immersing your customers in a bigger cause helps to build strong emotional ties between members, making your overall brand experience more appealing. This can improve customer-company identification, which creates value and belonging for customers, and encourages them to maintain their relationship with you rather than switching to a competitor.
Showcase your values and social responsibility efforts in a meaningful and authentic manner across your ecommerce store. Show that you’re a brand really living its values. A word of caution though: savvy shoppers will quickly suss out any disingenuous social responsibility efforts and take their buying power elsewhere.
To find out more about aligning with your customers in a way that secures long-term loyalty, check our blog post about social responsibility and retention.
Launch a tiered rewards program
To cultivate loyalty amongst your customer base and get shoppers coming back for more, try implementing a rewards program. This can make for a great competitive differentiator at a time when marketplace competition is fiercer than ever.
A tiered loyalty program, where customers can unlock increasingly valuable rewards with additional purchases, will not only motivate customers to add more to their carts, but it will encourage them to come back to your store again to reach those higher tiers.
When designing your program, set threshold criteria that gives customers something to strive for without being unrealistic. You also want to make sure that each tier offers exclusive benefits not available to customers at lower levels, else shoppers might not be motivated to move up a tier.
If you offer a subscription service alongside your one-time products, consider adding a VIP tier to your loyalty program, exclusively for subscribers. This is a great way to encourage more customers to sign up to your subscription offering, thereby securing recurring revenue through long-term spending cycles and boosting retention.
We discuss top tips for designing, implementing and managing a tiered loyalty program in our ebook with LoyaltyLion – check it out now for some expert advice!
Consider implementing a subscription model
Do your products lend themselves to a subscription service? If so, now is a prime time to consider adopting a recurring revenue model as an effective retention tactic (not to mention securing increased return on acquisition costs!).
Start simple, with a minimum viable subscription service. When you know what works and what doesn’t work, you can look to advance your offering from there. For brands selling consumables, a simple ‘subscribe and save’ initiative is a quick way to introduce a subscription service.
Pet supplement brand YuMove offers their customers a Subscribe & Save option.
The longer a subscriber stays loyal to your brand, the higher your retention rates and the greater their customer lifetime value. When it comes to retaining your subscriber base, here are some tips to keep in mind:
1) Communicate with subscribers regularly and be transparent about how and when they will be charged. Use automated email flows to keep customers in-the-know, as well as leveraging other channels like SMS and Messenger.
2) Be flexible! Make it easy for subscribers to skip, pause or edit aspects of their subscription to suit their needs. This is important for securing loyalty and advocacy, therefore boosting customer retention.
3) Provide an accessible, optimised customer portal for easy subscription management.
4) Leverage personalised cross-sell and upsell offers. By recommending relevant add-on items that will actually be beneficial for a customer’s individual needs, they’re much more likely to maintain their relationship with you.
5) Prioritise and reward loyal subscribers to demonstrate how valued they are. Consider offering benefits like free shipping, access to exclusive content, or early access to sales – all effective ways to secure ongoing loyalty.
YuMove’s subscribers are given free delivery, as well as free access to 24/7 vet support.
We recently teamed up with Rob Barr, Partnerships Manager at ReCharge, to discuss how online retailers can best leverage the power of subscriptions during such a challenging retail climate. Check out the Q&A session with Rob below:
Nurture relationships with personalised email marketing
Personalised email marketing is a big piece of the retention puzzle, and definitely something to prioritise in 2021. After all, 65% of shoppers say they’re more loyal to brands when they receive offers personalised to them. So, ditch the one-size-fits-all messaging and get creative with targeted emails that inspire and engage customers.
Here’s Hannah Bradford, Email Marketing Executive at Swanky, talking about how exactly personalised emails can improve retention:
“In a world where consumers are bombarded with messages and choices, personalisation can make a brand (and an email) stand out.
Personalised emails also strengthen a customer’s experience with your brand, making them feel seen as an individual rather than just another customer. If the emails are relevant to the person opening them, they’re more likely to engage with you as a brand on a long-term basis, leading to deeper relationships and a better overall customer experience.
Over time, this will help develop brand loyalty. It also increases the likelihood of customers recommending your product or service as they’ve had such a great experience themselves.”
Not sure where to start when it comes to personalised email campaigns? It all comes down to data and segmentation, according to Hannah:
“In email, personalisation means going beyond using just a first name. It’s about leveraging behavioural data and tailoring their experience accordingly. Using data to segment different types of audiences and understanding what each customer likes and needs allows you to effectively communicate content significant to them, and most importantly, at the right time in the customer’s journey.”
Here a few ideas for personalised email campaigns to get you inspired:
Incentivised thank you emails
Never overlook the power of a simple thank you email. With high open and conversion rates, these emails are must-have for customer retention. Encourage shoppers to purchase again with an incentive such as free shipping or discount code, and create a sense of urgency by adding a time-limit to your offer. Remember to use name personalisation in the subject line and throughout the email to add that personal touch, as well as product recommendations based on their previous purchase.
Personalised product recommendation emails
Highlight top picks for customers based on their unique purchase and browse history. By injecting individualised product recommendations into your emails, you can increase customer engagement, boost your click-through rates, and ultimately drive more online revenue.
Reach out to customers who haven’t visited your store in a while with a personalised “we miss you” email. You can use what you know about their previous purchases to craft a tailored email packed with relevant content and product recommendations.
Asking your customers for feedback on products they’ve recently bought and/or the service they’ve received demonstrates that you care about their opinions. When they feel valued like this, shoppers are more likely to stay loyal to your brand. Plus, customer reviews are an important form of social proof that you can leverage to influence buying decisions – win-win!
How to retain customers: Advice in action
As part of an ongoing customer retention workflow with one of the UK’s leading probiotic wellness brands, Swanky’s Growth Accelerator team have been busy identifying opportunities to encourage one-off product purchasers to commit to a subscription, thereby helping to boost retention and secure increased recurring revenue.
We caught up with Becci Price, Digital Strategy Manager at Swanky, to learn more about the tactics being implemented to help boost retention:
#1 Customer journey analysis
We’ve implemented customer surveys and heatmapping, which will allow us to combine qualitative data with the numbers we see in Google Analytics and Shopify, giving us a full picture of the customer journey and any pain points that are causing barriers to conversion.
By breaking this data down by demographic, behaviour and intent, this also gives us the opportunity to tailor the experience for different audience groups through further testing and optimisation, eventually getting us to the point where the client’s site meets the needs of all users – which should play a big part in improving customer loyalty and retention.
#2 Encouraging subscription sign-ups through testing and optimisation
In terms of on-site optimisation, our focus is on providing an easy way for customers to compare the different purchasing options available. We want to highlight the benefits of subscription vs one-off purchases on the Buy Now page.
Through A/B testing different page designs and product layouts, we can determine the most effective way to display the product information, not only to increase overall sales but specifically to determine the best way to increase conversions for the subscription program.
#3 Personalised email campaigns
We’ve also been optimising the brand’s automated email campaigns, to ensure that customers are continually being nurtured wherever they are in the customer lifecycle.
To help increase email engagement and reduce the unsubscribe rate, we recommended a more tailored and personalised approach, depending on the customer’s relationship with the brand.
Using Shopify tags and information gathered through data capture forms when a customer signs up on-site, we’re working towards building out automation journeys which will be personalised to the consumer’s behaviour and intentions. Through A/B testing, we will be able to tweak content, send time, frequency and CTAs, ensuring a more personalised, positive experience for the consumer.
The key takeaway
As acquisition costs spike, more and more brands are embracing retention as a top priority in 2021. By providing customers with unified, personalised experiences across channels and devices, and incentivising them to stick by your brand, you can build a tribe of loyal, satisfied shoppers whilst increasing your revenue and profitability.
Your Shopify Plus agency
If you’re looking for an experienced ecommerce agency to help unlock your brand’s full potential in 2021, look no further. With over a decade in the industry, we know what it takes to drive ecommerce growth at scale.
Reach out to our team today to find out more!