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Retention is critical for ecommerce ROI

Customer retention is critical for ecommerce ROI

Once you choose great products to sell and created your strong product portfolio and have identified your target market, company growth can take off — and it’s important to dedicate just as many resources to retaining existing customers as to selling to new customers.

And that’s what your customer success team is for — to help customers see value, and for you to achieve your goals. But there’s more to it than just answering customer service calls — it’s about creating a process from the very beginning that nurtures trust, affinity and loyalty. Ultimately this will enable to see the benefits in the most important metric you have, customer lifetime value.

Customer retention is impacted by how many new customers are acquired, and how many existing customers churn — by cancelling their subscription, not returning to buy, or worse – simply leaving.

Before diving into specific customer retention management strategies let’s cover the basics.

Customer retention strategy

Before you begin to consider a retention strategy, understand what your current customer retention rate is.

First define a period of time, e.g., quarterly or yearly. Then, follow this formula:

For example: Imagine you start the year with 20 customers, gain five new customers in the first quarter, and have one customer churn.

[ (24 – 5) / 20 ) ] x 100 = 95% retention

Here’s another example: You have 44 customers, you gain 12 new customers, and 13 customers churn:

[ ( 43 – 12 ) / 44 )] x 100 = 70% retention

Once you know your rate, consider doing an audit of your churned customers to determine similarities in reasons for leaving or types of customers that leave. You might find that customers with a certain budget or at a certain company size are more likely to churn than others.

Customer retention importance

Customer retention measures not only how successful a company is at acquiring new customers but also how successful they are at satisfying existing customers. It also increases ROI, boosts loyalty, and brings in new customers.

It’s also easier and more cost-effective to retain customers than to acquire new ones, returning customers spend more and buy more often, and refer friends and family. Only a 5% increase in customer retention can increase company revenue by 25-95%.

The numbers don’t lie: Retaining customers brings companies a ton of ROI.

There are a few reasons why customer retention is critical to company growth and success:

It might seem obvious — of course, companies should want to retain customers — but when companies start growing quickly and struggle to implement a solid customer support program, proactive customer support for existing customers can slip through the cracks.

Adopt predictive personalisation into into your technology.

Customers are more likely to stay loyal if your products are what they want. But never forget that competitors are always just a click away. Like herding cats, if you leave them alone for a second they’ll start to wander. temptation is everywhere, and the fundamental rule, if communicate as often as reasonably practicable but every means possible.

Highest priority is email marketing. Since the inception of ecommerce, email has been the provocateur of the highest ROI, typical quoted 3500% ROI (a £35 return for every £1 spent). Development of this has matured in the last few years into being the highest possible ROI in ecommerce, providing you refine your selection of software to predictive personalisation software (PPS). Studies from all the leading research companies, Forrester, McKinsey, Statista and Bain etc all says the same thing, it will deliver 20x the return of promotional email and omnichannel marketing combined. That’s massive.

If a customer can come to your site every time and find something they like, and most importantly falls into the category of being desirable, conducive to previous purchases (For fashion – materials, quality, size, style, colours etc, for wine it would be region, grape, colour, bouquet, year, vineyard etc ) then you know you have a better chance of perpetuating your relationship with that customer. but being able to take it to the consumer by email, you don’t have peers. It becomes a much more definitive proposition, do you want it – yes or no.

So, you may well ask, in what form doo these results manifest? If you’re choosing to show your consumers products selections personal to them, they naturally feel that you have gone the extra mile and made their offering something they can relate to. Like the shop assistant bringing something out-the-back that they had been keeping for the next time you came in.

On target product offerings increases basket size, and an average order value per transactions has inevitable profit benefit. It might not be appreciated immediately, but if you are offering products that the consumer wants, you are reducing those whim purchases which they can always send back if they don’t like it”. PPS almost obliterates your rate of return (RoR).

To put this is perspective, how many products are waiting from you to put back into stock returned to your loading bay every day? imagine if you could reduce that by 90%, wouldn’t life be sweet! This is the level we are talking about.

That means you need a good system for tracking and reporting on the metrics and KPIs that measure success to the customer, which should relate to the goals you establish.

How to Improve Your Customer Retention

We asked our clients to offer their perspective on helping other retailers improve their customer retention. In no particular order here are their top tips and strategies to follow when thinking of ways to increase customer retention:

  • Use customer accounts. Accounts can make repurchasing easier by giving customers instant access to previous orders and pre-filled shipping information. The trick is to provide the option to create an account after the first order has been placed.

  • Improve your customer support. Support systems help you effectively communicate with your customers and provide them with the right level of support. Having a live chat or help desk tool available can turn a customer question into a sale or a customer complaint into a resolution, whether they come in on site, through email, or via social media.

  • Start a customer loyalty program. Brand 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.

  • Send personalised emails. PPS give you the opportunity to build a relationship before and after an initial purchase. PPS starts from the moment a customer is registered on your site (has made a purchase – ensure your arms says you are given permission to both store and use email data – after all, how else can you confirm their order back to them?

  • Employ loyalty incentives such as a discount after the first purchase. Sending a discount code for their next purchase with a first-time order is a great way to nudge them to come back. For this reason, discounting can also be an effective way to bring back customers that haven’t purchased in a while.

  • Collect customer feedback. Feedback allows customers to get involved and to feel heard. Rather than being reduced to a number on a spreadsheet, your customers will feel more invested and therefore be more loyal if they feel as though their feedback is valued. It works as a fantastic advert, and wha used to be called word of mouth, converts into a lemming culture of “if this many people say its good, I will believe it too”.

  • Start a subscription program. A subscription program uses your existing customers to return much more frequently. This coming year will be the year of BNPL – buy now pay later. There is no better example of this that initiating a subscription facility, where the customer pays a regular amount each month and can buy products up to the facility provided for them. You can devise this in many direction, even Selecting and sending goods for them is possible. But be sure not to upset them, and listen to what they want more than what you want them to have. 

  • Consistently delight customers. Delighting a customer means exceeding their expectations. Offering great customer service, giving promotions, sharing personal stories, or even including gifts can all contribute to this. 

  • Offer fast delivery. People don’t like to wait long for their orders to arrive. Recent data shows nearly half of shoppers abandon their shopping carts due to long shipping times. 

  • Makes returns easy. Some 33% of repeat customers would abandon a retailer if they have a difficult return experience. Returns are a part of good customer service and making them easy and pain-free builds trust with your customers. 


Perhaps we need to be blatantly underline this, quite simply the more customers you have the greater the turnover you will achieve, the greater the profits – as to keep a customer is 6x less expensive than finding a new one.

If you’re running an ecommerce company you know roughly the size of your peers simply by the number of customers on their books. In context someone with 40k customer database is usually doing around £5m t/o pa in fashion. Capture and keep is the essence of the successful ecommerce business.

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