Businesses in the US could save almost $35 billion each year if they shift their focus to keeping customers happy and satisfied. Customer retention is a crucial part of successful online shopping businesses.
Thanks to technological advancements today, marketers and app developers can leverage analytics to understand the customer’s behavior, choice patterns, or complete holistic purchase history. Using this knowledge, they can tailor customer experiences while predicting future trends.
In this highly competitive marketplace, where customers can switch apps at any time, businesses must go the extra mile to satisfy existing app users to sustain success. This article will discuss every aspect of customer retention in shopping enterprises, from its significance to time-tested and tried implementation strategies.
Importance of customer retention
Cost efficiency
Acquiring new customers can often cost four to five times more than retaining existing ones. Remember that costs will rise even higher if you add other expenses, such as marketing, advertising, and onboarding expenditures. Therefore, it makes more economic sense for brands to focus on retaining existing customers.
Increased profits
Repeat customers buy several times and are likely to spend more money per transaction. Studies indicate that increasing the retention rate by just five percentage points increases profit by 25-95%.
Brand advocacy
When a customer makes their first purchase from your online store, they have a 27% chance of returning for a second purchase. If they buy a second time, the probability of a third purchase rises to 49%. After a third purchase, the chance of them buying again increases to 62%. Loyal customers often turn into brand advocates who publicize your product and service offerings through word-of-mouth. This is a highly cost-efficient form of app promotion.
Competitive advantage
In today’s market, shopping apps that have high customer retention have a clear competitive advantage over competitors. Shopping apps can only retain customers when they provide their users with unique value.
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Strategies for effective customer retention
Personalize the customer experience
Personalization is the most crucial aspect of creating an outstanding shopping experience. Analyze your shopping app’s data analytics to discover what your users prefer, and then use customer segmentation to tailor offers and recommendations that meet individual requirements.
Example: Sending emails suggesting some products based on a user’s past purchases or providing special discounts on birthdays can have a positive impact on how a user perceives your brand.
Exceptional customer service
58% of customers believe customer service plays a crucial role in building loyalty towards a brand. Customer service could be the key to customer loyalty. Make sure your client service agents are well-trained, empathetic, and responsive. They should solve problems on time and work hard to find viable solutions for them.
Example: Having 24/7 customer care or a live chat will make customers feel valued. They will appreciate your efforts in making their shopping experience delightful, and it will increase the chances that they will always be your loyal customers.
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Create a loyalty program
Loyalty programs give your customers a reason to keep doing business with you. It is the main reason why almost 71% of brands spend at least 2% of their revenue on their loyalty program. Point systems, exclusive discounts, and early access sales are all excellent ways to get customers to return to your app.
Example: Some brands or shopping apps allow users to make use of points they have accumulated for discounts when purchasing products. In other cases, they can get specific products for free if they have a certain number of points. Some of these loyalty programs also give access to early product releases and events.
Engage customers on multiple channels
Connect with customers across different platforms, such as email marketing, social media posts, news updates, mobile applications, or in-store experiences. Doing this will ensure that your brand stays at the top of users’ minds and create an enjoyable customer journey experience for each shopper.
Example: Social media platforms are ideal for uploading user-generated content, holding contests, and offering customer service, while email newsletters can be used for personalized updates with special offers.
Solicit and act on users’ feedback
Customer feedback provides an excellent insight into what is working well and where improvements need to be made. Solicit it through regular surveys, reviews, or direct conversations, and use this information to make decisions while letting customers know they matter!
Example: Send post-purchase surveys asking users about their shopping experience. You must respond to any problems raised and give them updates on changes you make to your shopping app based on the feedback they provide.
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Provide a great user experience
A flawless customer experience is crucial for customer retention. From navigating your website or app to checking out and from payment processing to integrating the payment gateway, you need to ensure that customers have a pleasant experience all along. Ensure that every single interaction your users have on your shopping app is smooth, so they stick with you for a long time and keep coming back to your app to make more purchases.
Example: Make check-out easy by offering flexible payment options and incorporating the guest check-out feature. Ensure that the site is mobile-optimized.
Provide consistent value
Your shoppers should know they can depend on your brand to meet their needs and expectations every time they shop with you. Whether that means quality products at competitive pricing or reliable services that exceed customer expectations, users of your shopping app need the confidence and assurance from you that every time they interact with your brand, it meets or surpasses these criteria.
Example: Promptly update your product offerings, maintain products that have high-quality standards, and offer competitive prices to ensure customer loyalty and future business.
Technology in customer retention
Technology plays an invaluable role in customer retention strategies. Advancements such as artificial intelligence and automation enable these strategies to be more personalized.
Analytics
Leverage analytics to consider a customer’s behavior and shopping patterns or to obtain a complete holistic purchase history. Use this knowledge to customize experiences for your customers while anticipating future trends.
Artificial intelligence
AI chatbots and virtual assistants can enable instant customer support, provide product suggestions, respond to questions promptly, and enhance customers’ overall experience.
Automation
You need to use automation mainly to manage the day-to-day struggles involved in sending personalized emails, managing customer loyalty programs, and keeping a record of every customer interaction with your business.
Automation will ensure consistency while you have ample time to concentrate on other more critical areas, such as retention efforts, which require more strategic attention.
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Measuring customer retention efforts
Some of the key metrics you should consider implementing when measuring customer retention include the following:
Customer Retention Rate (CRR):
CRR measures the percentage of customers who stay with your brand over a set period. A high CRR suggests successful retention efforts.
Repeat Purchase Rate (RPR)
RPR measures the percentage of customers who make repeated purchases from you over a period. If scores in an RPR are high, it signals that your brand maintains a high repeat purchase ratio and has strong loyalty.
Customer Lifetime Value (CLV)
CLV measures the revenue customers bring to a brand throughout their lifetime with an app. Shopping app developers and marketers should focus on increasing CLV as their main retention strategy objective.
Net Promoter Score (NPS)
This score measures customer loyalty to your brand. It not only highlights customer loyalty but also determines whether they would recommend your brand to another person. The better the NPS, the higher the customer’s devotion to a brand, along with their loyalty and support.
Conclusion
Customer retention is a multidimensional endeavor that requires strategic planning and diligent effort. Businesses or brands can significantly increase retention rates by personalizing customer experiences, providing exceptional service, creating loyalty programs, leveraging technology solutions, and maintaining effective employee-customer interactions.
Developers of shopping apps shouldn’t just retain customers; they should do everything possible from their end to turn them into brand advocates who drive the business’s long-term success. In this respect, nowadays, when the online retail landscape has become very competitive, not only is it nice to retain customers, but it is also crucial to achieve long-term sustainability growth.
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