Shopify Customer Retention: How to Sell More to Repeat Customers
Sales principles and marketing strategies come and go, thick and fast. Only a handful of doctrines stay true for several generations. One such principle is to use existing customers to increase the sales figures.
Even the best in business often get their priority wrong – they regularly invest a massive amount of time, money, and effort to bring in new traffic and develop new customers for their Shopify store. While it’s certainly desirable to have a constant stream of new customers, a much better strategy is to use current customers to maximize sales.
It’s easier to induce existing customers to purchase because they are already familiar with the brand. If you haven’t tried yet to convert your current customers to repeat and returning customers, then now is the right time to develop a Shopify marketing plan for customer retention.
The Foundation for a Solid Shopify Customer Retention Strategy
The Shopify marketing plan for customer retention relies on many factors, some of which are mentioned here:
The Ideal Stage to Focus on Customer Retention
Your mission for the next few quarters takes a concrete shape when you answer a few crucial questions. The most pertinent of all is ‘how old is your Shopify e-commerce business?’ The same question can be paraphrased ‘where is your brand in the business lifecycle?’
If you have just started an e-commerce store, then focus should be on acquiring new customers, because there aren’t enough of them to retain.
Measuring the Customer Lifetime Value (CLV)
Customers are the lifeblood of a business, and each one of them holds a special place in the proprietor’s heart. That being said, for the sake of present and future success of a business, it’s vital to measure the Customer Lifetime Value (CLV), which reveals the importance of each customer to your business. To determine CLV, you do not focus on a single purchase or transaction, but the net profit that a company earns from a customer throughout the relationship.
Calculating the Customer Lifetime Value is tricky, but it’s worth the effort. The CLV data will help you take tough calls; it’ll show you whether it’s worth pursuing customer retention policy, the techniques to use, which section of the customers to focus on, etc.
Bear in mind that not all businesses are created equal; this is equally true to the customers as well. Shopify stores that sell high-end products have lesser number of customers. But, they have higher CLV. Shopify stores that have higher Customer Lifetime Value spend considerable time and resources on developing a solid customer retention strategy.
Shopify Customer Retention Metrics
Pooling in all the best Shopify marketing techniques to generate repeat customers is of little or no avail if there is no means to justify their inclusion or measure their successes regularly. Luckily, the following metrics will help you frame a strategy, measure the progress, and improve its impact.
Repeat Customer Rate: Measuring the repeat customer rate will give a tentative figure of how many customers are willing to purchase again. The number or percentage also serves as a reality check, to evaluable the success or failure of the customer retention campaign. A repeat customer rate that on the higher side is a shot in the arm of a Shopify marketer; it means those who have bought from you are willing to return to the e-commerce site to spend more on your products.
Calculating this metric is simple, straightforward, and easy. You only need two variables and the basic understanding of simple mathematical division. From the analytics tool find out the number of customers who have purchased more than once for a specific duration (A). The second variable is similarly easy to find; it’s in the Shopify reports. The variable (B) represents the number of unique customers for the same duration.
The formula: Repeat Customer Rate = Number of customers who bought more than once (A) / Number of unique customers
Purchase Frequency: ‘Why bother about customer retention when I have a steady stream of new customers?’ We sincerely hope you never ask this question. That’s because the Adobe Digital Index report says repeat purchases make up as much as 40% of the total annual revenue in the United States.
The second metric that demands your attention is Purchase Frequency. This data shows how often the buyers return to purchase again from your Shopify portal. To calculate purchase frequency, you need the number of orders placed in a year (or any specific duration) divided by the number of unique buyers.
The formula: Purchase Frequency = Number of orders / Number of unique buyers
Average Order Value (AOV): This metric is self-explanatory; it gives you an idea of the amount of money a buyer spends on each purchase. Here too you use the same time frame that is used to calculate the Repeat Customer Rate and Purchase Frequency. Shopify makes your job easier by calculating AOV for you. You can get the Average Order Value from the Shopify reports, but if you want to calculate the value manually here is the equation.
The formula: Average Order Value = Total revenue / Number of orders
Customer Value: The Most Important Metric
While it’s vital to increase the three metrics mentioned above, the factor that must get the lion’s share of attention is Customer Value. Ask any Shopify e-commerce owner, he or she will say that each customer is worth more than gold. We appreciate the sentiment, but to create a customer retention strategy we need to know how much each customer is worth to you.
The formula: Customer Value = Purchase Frequency * AOV
Techniques to Improve Shopify Customer Retention
Having an array of exceptional products isn’t enough to induce customers to visit your Shopify store again and again. You must give them a reason and make them feel they stand to gain something from becoming a repeat customer. Offering a loyalty program is an effective way to increase the e-commerce site’s Average Order Value (AOV).
A loyalty program can take any shape or form. It might include offering the repeat customers a small discount for their subsequent purchases, or giving them a gift or cash back scheme once they accumulate a certain amount of points. The ultimate goal of a loyalty program is to cultivate the feeling that you value their business and their loyalty to the brand isn’t going unnoticed.
Improving Customer Service
At the end of a transaction, the customer should not feel he or she is just a number to the e-store owner. A strong seller-buyer relationship is built on emotions such as empathy. Yes, it’s possible to create this feeling among the buyers with customer service that goes above and beyond to satisfy a customer.
Be invisible, but be there for the customer when he or she needs assistance. If the Shopify store visitor has a question, give them a quick and satisfactory replay, because most buyers hate waiting for answers.
Reach out to the buyers and show them that you are willing to hear them, allay their doubts, and provide information on products, orders, or returns to their heart’s content. Also, the answers must be simple, friendly, and comprehensive.
Bad service alienates the customers, even when the e-commerce store offers them the best quality products. According to a report published in KISSMetrics, more than two-thirds (71% to be exact) of all customers ditch a brand because of poor customer service. By improving customer service, you can build brand reputation and increase customer retention.
Email Marketing for Customer Retention
Sending emails is an old marketing strategy that works even today. A customer receives an email every time an order is placed, processed, shipped, delivered, etc. But, how many of the emails are focused on customer retention? Not many. You can use the following ideas to make them return again and again.
When a customer has made his or her first purchase, send them a ‘Thank You’ note that’s short, personal, and friendly. Now is also a good time to talk about promotional code or reward points that they can use at their next purchase.
Send a reminder to repeat customers about new products, discounts, and events. Emails are also a great way to make customers feel valued and special. Send them a mail announcing the launch of new products a day or week before the items appear on the e-commerce store. Let them know they are getting the first shot at the new products for being a repeat customer.
Show the customers they are always in your thoughts by sending them gift cards or discount deals during holidays. Sending holiday gifts is a great way to be part of their happy memories.
It’s easier to return products bought from the local stores – this is what most people think. Some buyers hesitate to shop online because they do not trust the return policy of most e-commerce stores. Also, they do not want to pay for the return and deal with the tedious refund process.
Shopify e-commerce stores can clear this hurdle and help the customers remove the self-imposed restriction by offering free and quick returns. A free return policy will allow the buyers to purchase whatever they want, purchase, again and again, knowing well that the product(s) can be returned for whatever reason without delay or paying a fee.
Improve Customer Engagement
Nowadays internet users have so many accounts and passwords that they need separate software to store all their account credentials. E-commerce stores should not compound their problems by asking way too many details or make it tough for customers to recover their lost password.
The customer account section of the website needs to be as comprehensive as possible. The buyer must not be asked to enter his address or phone number every time an order is placed. The time a customer spends traveling from the product to the checkout page should be as short as possible, which can be achieved by saving the preferred payment method, shipping address, preferred delivery time and day, etc.
Customers are likely to purchase again if they spend more time browsing the products than placing the order.
Improve User Experience
Most e-commerce stores are known for a poor and cluttered user interface. So, focus on improving user experience to increase repeat customers.
Do not make the customers search for sign-up or login buttons. Reduce the number of links on the homepage and use customer location, order history, search history, etc. to present products that are likely to be bought.
While designing the Shopify store pay equal attention to how things look and how things work. Do not deviate too much from existing web conventions. After all, the conventions and practices that exist today is the result of constant trial and error. Use analytics and heat maps to identify and remove red flag areas.
It’s necessary to mention again and again – repeat customers increase brand value and boost profits; many reports back the claim. According to Marketing Metrics, it’s easier for e-retail stores to sell to repeat customers than new visitors to the store. Similarly, a report by Bain & Company has revealed that a 5% increase in customer retention can boost profits as much as 95%. In spite of these reports, precious little is done by most e-commerce owners to improve customer retention.
With a slight change in priority and a solid customer retention strategy, a lot can be achieved. But, your immediate thought should be to get started; you can streamline the approach later.