Customer retention

Why is it critical to focus on customer retention in e-commerce?

In prioritising tasks that play a key role in marketing a product, customer retention is often relegated to the bottom. Seldom considered a top priority, it is rather an overlooked aspect. But that should not be the case. Customer retention is one of the most important aspects of building a sustainable business. Let’s find out why.

What is customer retention and why is it important? 

Brands employ customer retention as a strategy to retain their existing customers. Customer retention also indicates the rate at which customers stay with a business over a period. For example, if you get 100 customers a month, and 50 of them come back to avail of your services/products the next month, your customer retention rate is 50%. 

The aim is to satisfy customers in such a way that it compels them to repeat business with you. In other words, you need to keep adding value to your customer’s life to retain them. Customer retention is, therefore, not a one-time strategy—it is an ongoing exercise.  

An effective customer retention strategy rests on two key pillars: customer loyalty and satisfaction. Prioritising these will go a long way in fetching repeat customers.

What does customer retention signify? 

Any consumer buying frequently through e-commerce websites and apps may have tried a variety of new brands in the past. But only some of them stick, prompting them to go back to the brand’s online store or app and buy again. The others that fail to leave an impact are soon forgotten. But when does one keep going back to a brand? 

When it’s good! 

Repeat customers are a testimony to the quality of products and the overall experience delivered. In fact, potential customers often flock to new brands, lured by the current purchase behaviour of existing customers. After all, if thousands believe a brand is good, it can work for a customer too. Having a robust customer retention strategy is a key imperative for scaling your e-commerce business. Just as expanding your customer base is important, so is ensuring the stickiness of existing customers. After all, repeat sales are mandatory for growth.

Benefits of customer retention in e-commerce 

  1. Lower marketing costs 

There are multiple benefits of customer retention. The foremost among these is the scope to maximise the revenue potential from each customer.  

The cost of acquiring a customer is a one-time expenditure. If your products or services are worth it, they will do the rest by keeping the customers hooked. Every repeat purchase will translate into higher profits, especially because no extra expenditure would be involved in attracting customers.  

This will bring down your customer acquisition costs drastically. In a world where brands are spending millions on customer acquisition, this is quite an edge to have. Over time, your marketing expenses will also decrease significantly.  

  1. Product development 

Having a long-term stable customer base gives you two distinct advantages in product development. 

First, it gives you room to experiment. You can expand the range of your products or make changes to your existing product line to keep up with your customer’s changing needs and, of course, stay ahead of the competition. However, if f you were always worried about your customers leaving, you would have to focus on a bunch of other things. Research and development would then take a back seat and your resources would be disproportionately devoted to customer service.  

Second, it also gives you access to excellent user data. You have ready-made samples for beta testing new features. Feedback from customers is helpful in product or feature optimisation. 

  1. Brand loyalty 

A thriving community of users indicates strong brand loyalty. The fact that you are adding value to the lives of your customers is quite gratifying.  

Brand loyalty also paves the way for customer acquisition. Word-of-mouth marketing attracts potential customers. This has a twofold benefit: you acquire customers at zero additional cost, and your pool of satisfied and happy customers continues to grow. 

  1. Scaling up of operations 

With customer loyalty no longer a concern, you can focus on scaling up your e-commerce business. High brand loyalty gives you the confidence and motivation to take your business forward. Besides, it frees up time and resources for diverting towards product development and growth of business operations.  

How can you improve customer retention? 

1. Exceptional service 

High-quality service is the first step toward customer retention. Introducing features such as live chat or on-time responses to queries/concerns shows prompt service. 

2. Easy-to-use website 

This is perhaps the biggest prerequisite for e-commerce. With the growth of D2C brands on social media, customers are spoilt for choice. No matter what product they need, there are hundreds of varieties. 

In other words, you have a scant few seconds to capture the interest of your customer when they land on your website. Make sure you use that time wisely. To that end, your website should be simple and easy to navigate. Locating products should not be time-consuming, else customers will lose interest and leave. 

3. Smooth e-commerce operations 

To build a successful e-commerce brand, you need to focus on both e-commerce operations and brand development.  

Any potential customer visiting your website is looking for smooth, on-time delivery of products. Efficient and optimised delivery is the foundation of sustainable e-commerce operations.  

Orders must be dispatched and delivered on time, while inventory should be managed properly. Order and inventory management are time-consuming processes. 

End-to-end e-commerce management platforms like Ordazzle are designed to facilitate e-commerce. You can track your orders and inventory on a common dashboard. Moreover, the automation of several e-commerce functions and their integration on one platform will increase efficiency multi-fold. 

4. Reward programs for loyal customers  

E-commerce is one of the most competitive industries in the world. There are no barriers to entry—anyone can create a website and start selling a product. 

Retaining customers when they are spoilt for choice is a tough task. An attractive reward program may help you keep them engaged. Such loyalty programs make customers feel valued, besides acting as an incentive to buy more products. 
With Ordazzle, you can drive seamless and efficient backend processes that help you deliver the best experiences to customers across channels, including websites, apps, and marketplaces. To learn more about the capabilities of Ordazzle, speak to our experts today!