5 Ways To Improve Customer Retention For Your eCommerce Business

5 Ways To Improve Customer Retention For Your eCommerce Business

The primary objective of any eCommerce business or online retail brand is to increase profits and drive sales. To do this, you need to sell more, which basically means you need new clients. However, investing in effective ways to improve customer retention for your eCommerce business is a lucrative alternative to acquiring new customers.

improve customer retention for your eCommerce business

This article is targeted towards understanding the various reasons why you should invest in a customer retention program, the metrics you should focus on, and the various strategies to improve customer retention for your eCommerce business.

What Is A Customer Retention Program?

A customer retention program is a set of specific activities or initiatives designed to increase sales to existing customers.

This is done by improving customer experience in terms of adding value to a customer’s purchase thereby encouraging repeat purchases.

The fundamental aim of customer retention strategies is to enable your eCommerce or online business to maximize sales opportunities and boost profits from your existing customers whilst providing them more value and superior service.

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5 Reasons Why You Should Invest In Customer Retention

While there’s a certain sense of achievement and allure in finding new customers, there are several strategic advantages of retaining current customers.

Here are 5 reasons why you should invest in a customer retention program:

  1. Lower costs
  2. Less Marketing
  3. Improve Customer Service
  4. Increase Profits
  5. Improve Conversions

1. Lower costs

Retaining existing customers will cost you far lesser than investing in new customer acquisition. In fact, a significant percentage of companies agree that retention is cheaper to execute than acquisition.

Cumulatively, the marketing costs, manpower costs, and the overall opportunity cost of finding new customers is far more intensive rather than converting an existing customer.

2. Less Marketing

Marketing and reaching existing customers require less or minimal marketing as opposed to reaching new customers. Basically, you’ll be spending less time and effort in finding and then convincing new customers.

Less marketing means lesser costs. In fact, it is 16 times as costly to build a long-term business relationship with a new customer than simply to cultivate the loyalty of an existing customer.


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3. Improve Customer Service

With a customer retention strategy in place, you can revisit your customer service and overall brand experience levels. Go back to your customers’ feedback and incorporate them into your new offering.

Was the customer service experience satisfying? Did the product meet all expectations? Did you provide good value for money? Simply ask these questions and learn from the responses.

4. Increase Profits

Lower costs and reduced marketing expenses mean you have tremendous scope for improving your profit levels by retaining existing customers rather than chasing new ones.

It is relatively easier to sell to existing customers since they’ve already bought from you before and they trust your eCommerce brand.

This makes it easier to get them to be interested in your latest range of products and you can even try nifty up-selling and cross-selling techniques.

5. Improve Conversions

Unless a customer has had a disappointing experience buying from you, there is no reason why they won’t buy from you again.

This is especially relevant when you are selling utility-driven products that people require on a regular basis.

Since your existing customers have confidence in what you offer and the support you provide, it’s easier to retarget them by identifying their needs and converting them again.

5 Customer Retention Metrics You Should Focus On

While the reasons mentioned in the section above justify the purpose of customer retention strategies, it is important to understand how to optimize and improve customer retention for your eCommerce business.

The key to refining your customer retention rate is understanding the underlying metrics.

We’re going to dive a bit further into understanding three of the most crucial customer retention metrics and how they will help to build a customer retention strategy that has a significant and lasting impact on your store’s profitability.

Here are 5 metrics that will help you improve customer retention for your eCommerce business:

  1. Net Promoter Score (NPS)
  2. Customer Retention Rate
  3. Repeat Purchase Rate
  4. Product Return Rate
  5. Customer Churn

1. Net Promoter Score (NPS)

Net Promoter Score is best defined with this one statement: “On a scale of 0 to 10 with 10 being the highest and 0 being the lowest, how likely are you to recommend us to a friend or a relative?”

Based on your customer’s response to this simple question, the Net Promoter Score is derived.

This metric is an effective way to gauge if your customer is happy and satisfied with what you are offering and how comfortable they are with recommending your product or business to their network of people.

How to Calculate NPS?

Subtract the percentage of detractors (people who are not satisfied with your product) from the percentage of promoters (people who will advocate your brand to everyone else) to get NPS.

NPS= %Promoters- %Detractors

2. Customer Retention Rate

Customer Retention Rate refers to the percentage of customers who have stayed loyal to your eCommerce business.

CRR, as a metric, is a clear indicator of how successful your customer retention strategies have been.

The higher the retention rate, the better you are at your business. Depending on your business’s requirements, you can calculate Customer Retention Rate on an annual, monthly or weekly basis.

How to Calculate Customer Retention Rate?

CRR = (Number of customers at the end of the month – Number of customers acquired in the month)/Number of customers at the beginning of the month)*100


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3. Repeat Purchase Rate

The Repeat Purchase Rate (RPR) is the percentage of customers willing to make a second purchase from you or the percentage of your current customers that have come back to buy from you again.

When it comes to measuring customer loyalty, this is a very efficient metric which makes it a promising performance indicator of your overall customer retention strategy.

How to Calculate the Repeat Purchase Rate?

RPR can be calculated on a weekly, monthly, or quarterly basis.

Repeat Purchase Rate = Number of Returning Customers / Number of Total Customers

4. Product Return Rate

This is an especially relevant metric for eCommerce businesses and online retail brands. Product Return Rate (PRR) calculates the number of total product units sold that have been returned to you.

This metric is worth keeping an eye on when it comes to gauging the effectiveness of your customer retention strategies.

Although there are multiple reasons as to why someone would return products, the simple fact is that product returns are never good, and the ultimate goal for your online store should be to eliminate returns or keep it at a minimal number.

How to Calculate Product Return Rate

Product Return Rate = Number of Returned Units / Total Number of Units Sold

5. Customer Churn

In all probability, this is the most honest and ‘no-nonsense’ of customer retention metrics, your eCommerce business’s customer churn rate is an indication of the rate at which customers stop doing business with you or the rate at which your customers do not remain a paying customer anymore.

An irrational increase in churn rate means your product or customer service is failing to meet your customers’ expectations or requirements.

How to Calculate Customer Churn

Annual Customer Churn Rate = (Number of customers at the beginning of the year – Number of customers at end of the year) / Number of Customers at the beginning of the year

5 Strategies To Improve Customer Retention For Your eCommerce Business

We’ve explored the reasons to opt for a customer retention strategy and the metrics to improve it. Now it’s time to highlight some tangible ideas and strategies that you can adapt to improve customer retention for your eCommerce business:

  1. Provide exceptional customer service
  2. Leverage Your Customers’ Accounts
  3. Invest in loyalty or reward programs
  4. Harness The Power Of Email Marketing
  5. Offer a discount or credit

1. Provide exceptional customer service

Quality customer service is the key to keep customers coming back and to build strong customer loyalty.

In fact, research suggests that a whopping 68% of customers leave because of a lack of appropriate treatment and poor customer service levels.

This goes to show just how crucial quality customer service is to improve customer retention for your eCommerce business. There are several ways to improve customer retention for your eCommerce business:

  • The first is to include a live chat option to better assist your customers in real-time. Many eCommerce businesses and online stores use chatbot powered tools to address customer queries. Include a helpline number, an email address, or the address of your physical storefront or office. Make your online store come across as one that is all out to help the customer. This will surely improve customer retention for your eCommerce business.
  • The second is to invest in a dedicated customer service or a customer support team that is well-trained and one that logically aims to resolve any discrepancies at the earliest. Swift and constructive assistance will definitely help to improve customer retention for your eCommerce business. Smaller online businesses can strategically outsource this task or provide an effective alternative such as an easy return policy or a quick video guide to explain the utility of the product.
  • The third is to incorporate all customer feedback received in the past and build on the weak spots in order to provide the best possible value and experience for your customers. A better purchasing and user experience will have a positive impact and do wonders to improve customer retention for your eCommerce business.
  • The fourth is to always make your customers feel respected by ensuring that you always listen to them and are always polite to them. Every customer service opportunity is a chance to retain your customer and make them a loyalist to your brand.
  • The fifth is to provide speedy response times. Customers value speed and if you lose a customer because of delayed responses, it will result in your customers retracting form buying your products. This will not help to improve customer retention for your eCommerce business.
  • The sixth is to provide an overall slick and smooth user experience. If your online store’s web design is clunky or unresponsive on a mobile device, or if the sign-up process or checkout process is tedious and cumbersome, you will lose customers at a speed of knots. Interact with your loyal customers to understand where you can make improvements in the overall online shopping experience. This proactive measure will work well to improve customer retention for your eCommerce business.


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2. Leverage Your Customers’ Accounts

Many people prefer to make a purchase and checkout as a guest.

However, growing your business is easier when your customers have accounts since it makes it easier for you to retarget them and it’s also easier for them to make another purchase.

The best way to leverage your customers’ accounts is to offer the option of creating an account after their first order is placed.

Couple this with a simple sign-up process that allows customers to sign up using email or Facebook or Twitter and a juicy incentive to make a second purchase, and you have a winner.

Since you’ve already captured have their shipping address and payment details, the sign-up process can be made hassle-free.

This is a creative way to improve customer retention for your eCommerce business.

3. Invest in loyalty or reward programs

Another way to improve customer retention for your eCommerce business is to invest in offering loyalty or reward programs.

Just as you would offer special benefits and give away discounts to acquire new customers, you should offer enticing benefits to customers for returning to your online store.

This is exactly where loyalty programs come in handy. Not many know that 74% of customers are said to choose a store based on a strong loyalty or discount program.

You can use reward programs for encouraging people to open an account on your store by offering exclusive discounts or welcome points.

However, several eCommerce businesses and online retail brands offer loyalty and reward programs but fail to retain customers.

And this is down to the fact that their loyalty programs require too many purchases to earn rewards that can actually be used.

The best way to address this to get loyalty or reward programs to improve customer retention for your eCommerce business is to:

  • Make your loyalty programs simple

Don’t hinder your customers’ signup journey for your rewards program by asking them to fill in unnecessary details.

The idea is to get them to sign up and start earning points and rewards and eventually keep coming back to your online store.


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  • Make your loyalty programs free

The loyalty program is an incentive for your customers to purchase more from you and consistently return to your online store.

Don’t charge for it unless you can justify the incentive to pay for the program. It needs to be free and devoid of any complicated terms and conditions.

  • Make your loyalty programs fun and worthwhile

Customer engagement is an important element of customer retention. If you can engage with your customers by making your loyalty or reward programs fun, you will succeed at retaining customers.

Gamification of your loyalty programs is a great way to make it a fun experience. Furthermore, including a tempting reward will make it worth their time.

4. Harness The Power Of Email Marketing

Another promising avenue to improve customer retention for your eCommerce business is to indulge in email marketing to engage with existing customers.

Emails give you the opportunity to build a strong and memorable relationship with your customers.

This makes it an effective route to engage and interact with your customer before and after they make their initial purchase.

For email marketing to work its charm, you need to be sure that each message you send adds value to your customer’s experience.

Start with follow-up emails a week or two weeks after a customer makes his/her first purchase. Acknowledge their purchase by congratulating them on it or by saying thanks for buying. This warm greeting will make your brand approachable and amiable.

One way to make this initial email even more impactful is by including relevant recommendations of products that either complements their initial purchase or ones that they have recently searched for.

Lastly, feel free to include valuable and positive customer reviews.

Insightful and helpful endorsements will increase both the value of each recommended product and the desire to buy them.

You can even use email marketing and automation tools to be sent at frequent intervals to remind the customers of your brand, the benefits of buying from you, and the new products on sale.

Email marketing is also a great way to send birthday greetings or seasonal or festive mails along with certain instantly redeemable incentives.

These direct emails will surely encourage repeat business whilst offering a superior customer experience.

5. Offer a discount or credit

Many eCommerce businesses consider offering discounts as a risky mode of retaining customers because it eventually leads to an expectation of reduced prices that eventually hamper your brand image and subsequently your revenues.

However, when discounts are offered to the first-time buyer, they actually love it!

Also, sending a discount code for the next purchase with a first-time order is a brilliant way to prompt customers to come back and redeem it.

This makes discounting an effective way to improve customer retention for your eCommerce business.

You can make that prompt even more effective by offering a special discount of 20% instead of the standard 10% off.

According to Market Wired, once a customer comes back for a second purchase, they have a 54% chance of doing so again.

Think of the discount as an investment in boosting your repeat customer rate.

This way you can also offer a direct credit ($10 towards the next purchase) as opposed to a percentage discount (10% off on the next purchase).


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5 Simple Hacks to Improve Customer Experience on your Online Store

From brand hoardings to personalized service to the immediate gratification of physically trying on products of interest, the overall in-store shopping and customer experience is largely satisfying.

However, it’s hard to translate that superior customer experience online.

As an online retailer, you are not only in constant breakneck competition with physical storefronts but also with other online retailers and businesses.

To truly stand out and build a loyal following, it is wise to invest in an exceptional customer experience strategy.

Shifting eCommerce trends and the ever-improving tech landscape can make it a tad bit challenging to keep track of what changes you need to implement in order to improve customer experience.

Don’t fret, as we bring you 5 strategic and easy to implement ways to augment the existing customer experience levels.

1. Improve your website design

Simply selling unique products won’t be enough. Your website is the first touchpoint for your shoppers to interact with your business. Clunky and cumbersome website design will spell disaster for your online store. Your website needs to have:

  • A logical navigation framework
  • A warm and welcoming design
  • Smart typography coupled with high-quality images
  • A simple and informative content architecture

Over and above this, you need to constantly make tweaks and improvements to the design of your website. This also means making your website compatible with all device types.

Responsive website design is imperative for your eCommerce website to be accessible by all demographics of your target audience seamlessly across all device types.

A poor mobile experience of your website will leave your shoppers frustrated and most likely lead to cart abandonment.

Your home page should be an even balance of visuals and contextual information.

Keep the customer journey in mind when designing your website. This way shoppers will never get frustrated and bounce off your website.

Instead, they will stick around longer and probably make a purchase.

Poor navigation, grammatical errors in your content, unappealing color pallets, inconsistency in design or brand tone, unresponsive pages, etc. will not go down well with your shoppers.

2. Provide multiple contact points and a live chat option

Customers want multiple ways to contact you. And this information should be easily available and accessible on your website.

If the only way to reach you is an email address, you are bound to lose customers over time as people don’t have the patience or inclination to type out a formal long email regarding their queries.

Include a simple contact form, a Facebook messaging interface, an email address, a helpline number, a physical office address, and even live chat options.

Having a live chat option on your website is probably the closest your website can come to in terms of offering an almost real-life customer service representative.


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Incorporating this function means you will need to have a customer support team to handle queries.

However, you can now automate most of this process by using AI-powered chatbots.

Smooth and efficient online support can go a long way in establishing you as a promising brand in the minds of your customers. Think about the amazing word of mouth you stand to enjoy!

3. Offer a personalized experience

With 59% of marketers experiencing staggering ROI after offering personalized suggestions, it is wise to indulge in offering a personalized touch to your customers.

For instance, you can use smart AI tools to can offer product suggestions to your customers based on their previous searches and based on what they have added to their wish list.

Personalization touchpoints can be incorporated and delivered in several ways:

  • A bespoke ‘Hello’ page with the name of the customer
  • A ‘Wish List’ and suggestions based on it
  • Recognizing the delivery location
  • A list of recently viewed items
  • A list of recommendations based on the items a customer has viewed
  • Displaying information in customers’ native language
  • Sending personalized emails on birthdays or an invitation to visit a local brick and mortar store or an invitation to an exhibition or event.

4. Include product information and high-quality images

Great customer experience heavily depends on how you showcase your products. Include a descriptive and crisp product copy for every product and team it with high-quality images.

Include useful information as to how the product works and supporting images of it in different scenarios of application.

This includes info on measurements, size charts, and fit, crisp description of the item, and washing instructions.

In case you are selling a tech product or something that needs to be assembled, include a clear set of instructions or a link to an e-brochure to better explain the product and its application.

When it comes to photos, include images of the product from multiple angles, colors, and even models wearing the product.

This will help your customers get a better idea of the product and will increase the likelihood of a purchase.

Consider including 360-degree views along with a zoom feature. You can even opt to include a short video or GIFS.

Furthermore, include product reviews from other customers. This will double up as social proof for your products and will assist your visitors to make a purchase decision based on others’ reviews.

5. Simplify the checkout process

Your bid to offer a stellar customer experience will fall flat if you don’t offer your visitors a simple and hassle-free checkout process.

Your checkout process must be optimized and intuitive so that your customers don’t get frazzled and frustrated and eventually abandon their cart.

Here are a few handy tips to simplify your check out process:

  • Allow users to view, edit, and add products to the shopping cart and check out on every page. Don’t have them going back to a specific page to access their shopping cart.
  • Include all forms of payment options. Offer localized payment options such as PayTM in India or Alipay in China, cash on delivery, credit card/debit card payments, etc.
  • Make your final price inclusive of taxes. Avoid adding these costs at the last step as this will deter people from trusting your pricing policies.
  • Offer multiple shipping options and clearly mention the additional costs and estimated time of dispatch and arrival.
  • Allow shoppers to easily access discount codes.
  • Display information in case of out-of-stock items and give a number of the available stock.
  • Offer account sign-up plus guest checkout
  • Don’t ask people to log in or sign in or fill a tedious form in order to check out.

Final Thoughts

The world of eCommerce, although pulsating and ostentatiously growing, is a cesspool of competition.

And the best way to consistently churn profits and sustain is to be smart and this means tapping into your list of existing customers and convert them into loyalists.

While investing in a customer retention strategy is imperative, the strategies to improve customer retention for your eCommerce business mentioned above are equally important. Get started now!

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