The Disappearance of Customer Loyalty in ECommerce Leads to Less Customer Retention
Return and repeat customers are important to any business, but customer retention for eCommerce companies is essential to survival. However, hitting appropriate customer retention rates is becoming an increasingly difficult hurdle for eCommerce companies. Across industries, growing eCommerce brands are failing to bring customers back to their online store.
Statistics from the United Kingdom and Europe indicate that over 60% of customers only make a single purchase from an eCommerce brand. Numbers in the United States are slightly better, but even here most shoppers aren’t returning to eCommerce companies in the numbers online retailers would anticipate. Instead, shoppers are jumping from business-to-business without any real concern for brand loyalty. This lack of customer retention for eCommerce companies has caused a number of businesses to realize that product satisfaction alone isn’t enough to bring a customer back for another purchase.
“Satisfaction is a rating. Loyalty is a brand” – Shep Hyken
Why Is the Low Percentage of Customer Retention Concerning?
ECommerce companies spend a significant amount of their marketing budget on winning over that first-time customer. Part of the incentive to push for new business is the expectation that it will require less work (and finances) to bring these customers back to the checkout after an initial purchase. However, if that isn’t happening, then marketing initiatives might be misaligned to potential revenue.
As well, repeat and return customers are likely to spend more with an eCommerce brand than a first-time shopper. These customers are individuals that have built up some confidence in your company and are ready to try other products you have to offer. In terms of revenue, repeat and return customers are excellent for business. In fact, they spend nearly three times that of a first-time customer.
A study by the Harvard Business School determined that by increasing your customer retention by 5%, a business can raise profits anywhere between 25% and 95%. Even customer retention for eCommerce companies on the low end of that estimate will experience a significant boost to sales. A lack of customer retention means you are not only losing out on that second purchase but the opportunity to make even more money off a single shopper.
#1: The Brand Refuses to Recognize the Competition
It might seem surprising but, for some eCommerce companies, the immense competition from similar online stores can be a blind spot. It is as if the insular nature of the Internet prevents these businesses from seeing how busy eCommerce has become. However, the proof is apparent when you consider the poor customer retention for eCommerce brands.
In an age when anything is available online and there are endless new options for an old product, there is far less brand loyalty than in the past. Therefore, an eCommerce company has to remain nimble and focused to survive. It also needs these qualities to win back the first-time customers who may start looking elsewhere for that second purchase.
One strategy is directly addressing a customer’s wandering eye by providing a discount or price cut that removes the closest competition. Other eCommerce companies grapple with customer retention by ensuring consistent communication with a first-time customer in the days and weeks after that initial purchase. Emails that request specific feedback about a product or for a review can help determine if the customer is likely to be returning.
#2: The Business Forgets that Customer Retention Brands is Built on Email
If your eCommerce company isn’t sending personalized emails to shoppers after a purchase, then it is missing the best opportunity out there to gain a return customer. First, the best time a brand can contact a shopper is just after a purchase. The customer has specifically engaged with the company and is expecting to receive a physical product shortly. So, follow-up! However, if all you are sending is a generic “thank you” note, it isn’t enough.
#3: The Business Doesn’t Build a Relationship with Customers
Customer retention for eCommerce stores is about creating a relationship between your brand and a first-time customer. However, you can’t expect that single interaction to create this lasting relationship magically. Just as relationships in the real world require time, maintenance, and effort to develop, customer relationships require the same.
“Get closer than ever to your customers. So close that you tell them what they need well before well before they realize it themselves.” – Steve Jobs
Most eCommerce companies know that there is more to building a customer relationship than simply sending a receipt of purchase. However, these same businesses fail to take the necessary steps to foster a better relationship after purchase. The cost is customer retention for eCommerce companies, irrespective of size or industry.
#4: There Isn’t a Mechanism to Have Immediate Communication in Place
In the world of eCommerce landlines and phone numbers are a rarely discussed, nearly forgotten form of communication. However, if you want to improve customer retention for an eCommerce business, then it is important to rediscover the type of communication that phones allow.
When you pick the phone and call someone it leads to instant and direct communication, which is still valued by many online shoppers. In fact, over half of all online customers express a desire to reach an eCommerce company outside of email. However, providing a 24/7 customer service line isn’t your only option for communication that goes above email.
There are a number of creative and digital ways to get in touch with your customers. Social media is a fantastic option because it encourages your customers to engage with your brand on other platforms. Another choice is to set up a chatbot on your website. Taking this step into artificial intelligence gives your customers a way to reach your business without any added hassle or need for information.
#5: The Brand is not yet Associated With Relevant Content
We are entering a phase of content overload online, through our mobile devices, and across social media. There is quite possibly more content out there than can ever be processed by a single person, yet, companies and customers remain hungry for the next post, article, comment, or tweet. Why are people still craving more information to digest? They are hoping to find something relevant and enjoyable.
Understanding that there is still a massive market for high-quality content is important for customer retention, as what you create beyond a physical product is still in demand online. You just want it to be good, useful, and relevant.
Where to Go for Further Advice on ECommerce Customer Retention?
When it comes to digital marketing, content creation, and web development for eCommerce, the team at 1Digital Agency in Philadelphia are experts. Our focus remains firmly on eCommerce brands and their obstacles to success. This allows us to provide digital solutions that empower a growing brand and improve a business. Visit us online to learn more about the 1Digital Agency eCommerce expertise today.