The world of eCommerce revolves around the delivery of customer-centric services to improve customer retention. Online retailers constantly face the challenges of generating leads, onboarding new customers, and most importantly, retaining the right ones for as long as possible. According to a KPMG study, customer retention is the most important driving force behind revenue generation.
Failure to prioritize customer retention as part of their strategy often hinders the growth of small and medium businesses. For this reason, establishing and maintaining customer loyalty is a crucial aspect that needs to be considered in order to achieve long-term growth and profitability. Although generating leads and onboarding new customers seems to be an alluring achievement in businesses, research shows that retaining loyal customers leads to a higher ROI, and also costs 5 to 25 times less.
Before moving on to customer retention technology, let’s dive into the basics of customer retention. The concept of customer retention has obviously been around for a long time and is used by businesses as a metric to determine the loyalty of their customers. Retail businesses in particular adopt various methods to drop the number of customers lost in a specific period of time. Chief among these is providing an enhanced customer experience. In today’s era of digital-first retail platforms, a great customer experience translates to personalized services, convenience, and trust.
That being said, it takes various tools and tactics to achieve the desired numbers in terms of customer service. Businesses big and small have to incorporate data analytics tools as well as automated retail services to stay ahead of the competition. With the help of omnichannel loyalty solutions, businesses can avoid losing loyal customers due to errors arising from manual operations and guesswork. Using manual methods to determine customer loyalty leads businesses to a blind spot where they simply do not know what needs to be done to meet customers’ expectations.
Retailers that have a customer-centric approach are seen leveraging customer retention technology to maintain brand loyalty by offering personalized discounts, subscriptions, and surprises. Finding the right balance between technological solutions and employees is an important aspect that businesses of tomorrow need to consider while putting together their growth strategies.
Online communications and retail management technologies are transforming the way businesses make their way through day-to-day processes. These solutions not only help to make operations more efficient but also have implications for customer retention. Studies have found that customer service issues often link back to old and outdated retail management systems. In fact, 45% of US customers abandon transactions in case their queries are not resolved instantly.
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Benchmark Customer Retention Rate for E-commerce in 2023
Customer retention rate is defined by the percentage of customers that purchase from an eCommerce platform repeatedly over a given period of time. For instance, if a retailer has 10,000 customers in one month and 2,500 of those customers make a second purchase in the future, the customer retention rate for that business will be 25%.
What is a good retention rate for E-commerce?
Although the ideal customer retention rate would be 100%, it is quite unrealistic in the real world. Leading e-commerce companies formulate their strategies to achieve the highest retention rate, which is between 80 to 90%.
What is the average customer retention rate for Ecommerce?
Studies show that online retail platforms achieve an average customer retention rate of 28.2%. However, the number varies depending on the industry in question.
Following are the retention rates observed in different segments of e-commerce:
Pet products: 31.5%
Food Supplements: 29.1%
According to experts, the retention rate must be measured using highly specific metrics because there is a wide range of products and services being offered by e-commerce platforms. The metrics that need to be considered are customer lifetime value, average order value, and repeat purchase rate.
Loyal customers are known to bring more profit to businesses because they have already experienced and established trust with the company. But the tricky part is converting first-time buyers into loyal customers that stay. Managing customer retention manually can be a tough job to pull off, especially when everything is on the line. For this reason, technological solutions provide retailers with valuable insights into customer expectations and help deliver personalized services. Customer retention technology can be anything from an email marketing solution to an inventory management system. At the end of the day, what matters is the customer.
Merging Customer Data Under One Platform
Based on recent trends, the most effective customer retention strategies are based on shared information across all business channels, including the tech side. Omnichannel platforms bring the smallest details relevant to customers, including their preferences and past purchases, under one dashboard.
When a brand has a comprehensive understanding of every aspect of a customer’s journey, they are able to redefine their customer retention strategy and move in the right direction. Whether it is a complete out-of-the-box solution or a simple integration, customer retention technology is critical to the growth of any retail business.
Engaging Customers with a Modern Loyalty Program
Great customer experience is the stepping stone to success in any e-commerce business as helps generate a higher ROI. That being said, the ideal strategy to build trust among customers involves a modern loyalty program. Traditional incentive programs to build customer loyalty worked for businesses until the e-commerce trend took over. These programs rewarded customers for long-term engagement and loyalty to a brand.
As the world moves towards online retail, loyalty programs like XStak’s Omniretain provide businesses with the right tools to evolve. Customers of today expect their loyalty programs to be personalized just like product recommendations. For businesses, this means that they have to offer unique rewards, discounts, and surprises based on customers’ preferences. Moreover, points-based loyalty programs enable companies to conveniently keep track of customers that have made repeated purchases over a given period of time. This allows those customers to get special discounts based on their loyalty, hence improving retention rates.
Getting Customer Feedback
Brand loyalty does not only mean that a customer comes back to make repetitive purchases. Loyalty can also be defined by customers that are ready to pay a higher price for products of a particular brand. For this reason, it is important to know what customers like, and how they expect it to be delivered. Growing a retail business requires getting inside the customers’ heads, which can only be done by implementing a customer feedback system.
Customer retention rate can be improved significantly when a company works according to the feedback and expectations of its buyers. Customer retention technology solves this problem by obtaining and sharing customer feedback with every relevant person throughout all channels. It provides detailed insights to business managers along with tools to analyze, categorize, and distribute valuable customer feedback.
Enhance member loyalty through pricing and promotions
Last but not least, a time-tested method for improving customer retention is offering seasonal promotions. Considering the e-commerce sector, promotions and pricing plans are also heavily dependent on customer loyalty. Studies show that 94% of customers look for a promotion while shopping online. Offering exclusive promotions and discounts is definitely a great strategy to retain customers and increase sales. It helps keep the customers engaged with amazing deals on new and exciting products that they previously thought they could not afford.
Through the effective use of customer retention technology in the form of XStak’s Omniretain solution, brands can identify and manage their customer loyalty programs. The solution provides an omnichannel view of customers’ past purchases and preferences to help businesses understand what kind of personalized rewards they can offer to their loyal customers. Viewing all the relevant customer data under one dashboard makes for a highly convenient customer retention program, where managers do not need to consult with any additional personnel.