How to Increase Customer Retention Rate for Ecommerce Store?

Running a business is a manageable task today. The battle is rattling for new customers, and the real one is keeping them loyal to your product. This brings us back to Customer Retention. So, if you're a business owner looking to know more about customer retention rates, let's know more!

What is the Customer Retention Rate?

Customer Retention Rate (CRR) is the number of customers a business or a company retains over a specific period. This rate is directly proportional to the reflection of your company's customer loyalty and satisfaction.

A high retention rate indicates that the customers are happy with your product and repeatedly purchase it. However, a low retention rate suggests that the customers might be exploring other options, which could be a huge red flag for customer satisfaction.

How to Calculate Formula for Customer Retention Rate?

Customer Retention Rate =

{Number of customers at the end of the period -new number of customers acquired during the period /Number of customers at the start of the period}/ x 100

CRR = {E-N/S} x 100

Assume that you have 40,000 customers at the start of the first quarter and gained 15,000 more customers during that quarter, so the total number of customers at the end would be 55,000. Hence, given the statistics, your customer retention rate is:

{[55,000-20,000]/40,000}x 100 = 87.5%

So 87.5% of customers from the first quarter were retained. A high retention rate indicates that customers are satisfied and happy with the products; hence, they're loyal to your business.

However, a lower customer retention rate indicates that many customers have second thoughts about continuing to shop for your products. This implies that customers are churning, and the business needs to improve and be more inclined towards a customer-centric approach.

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If you need more support with the conversion rate of your Shopify store, start by visiting our blog on how to increase conversion rates

How to Determine Customer Retention Rate?

Measuring customer retention could be daunting. Hence, various software programs have been built to record customers' purchasing styles, customer ID numbers, shopping psychology, demographics, etc.

The period here is a variable yet an essential determiner, typically a month, a quarter, or an annual. The approximate period used for calculation depends on the type of the business: for example, an OTT or a company selling monthly subscriptions could be calculated on a monthly retention basis. The annual report is preferred for those that sell items in bulk with less frequency.

Below are some steps to calculate the eCommerce retention rate:

1. Determining the period
2. Record the number of customers at the start of the period.
3. Identify the number of new customers added during the period.
4. Calculate the total remaining customers at the end of the period.
5. Substitute the values in the formula, and you'll have your answer.

Once you learn this technique, you have to judge the score and work on increasing it to make your business sound more appealing to the customers. The key is to track it consistently over time and aim for an upward trend.

Tricks to Increase Customer Retention Rate:

Upscaling your customer retention rate could be daunting, especially when you're a newbie in the industry. Here are ways to ace your customer retention rate that you can count on regardless of the industry or the business you're in:

Developing A Mobile App:

A well-designed mobile app lets customers shop more conveniently and frequently in their comfort zone. Moreover, the mobile app could send notifications based on personalized product recommendations, exclusive deals, loyalty program memberships, etc.

Develop Mobile Apps Without Coding

Suppose you want to build a mobile app quickly, so go with a no-code builder. LEO Mobile App Builder is the best Shopify app for app development. You need to drag and drop and edit or customize the section. It has many features that help to increase eCommerce store sales . Such as,

• Push notification
• Unique landing page
• In-App Filters
• Discount & Coupon
• Multi-currencies
• Native-language

Customer Loyalty Programs:

One of the most trending, promising, and easy ways to upsurge customer retention rates. Implement loyalty programs to reward repeat customers and increase customer retention rate. A points-based loyalty program adds up every time you order something and eventually turns up to a large number, which can later serve as cashback or discount prizes.

The premium version could be more exclusive when you add alluring words like "gold, silver, platinum, diamond" to motivate customers to keep buying your products.

Discount & Gift:

To increase customer retention, offer exclusive gifts, discounts, and reward points to customers who order regularly from this address. This will make the customers feel loved and valued. Once they think they're getting extra, their psychology will be affected.

It might be a gift, a few samples to try on, an exclusive discount code, or early access to a new product that'll keep their interest in buying products from you intact.

Up-to-date Follow-up Push Notifications:

Timely and relevant push notifications are not cliche but cheesy and attract attention to read, update customers on any ongoing offers, any previous items added to the cart that were left, or give complementary products on a recent purchase. But make sure you don't spammy. Push notification ideas will help you determine which notifications are useful for customers.

Email Marketing:

Identifying your Target audience and sending engaging, interesting, and giving emails can be the right way for your business. Email campaigns often work decently to help companies stay on top of shoppers' minds. Regularly engage with customers through this strategy to strengthen relationships and increase customer retention rate.

Personalized emails with names on cart abandonment, product recommendations, customer-only sales, and company news make the customer sound like home and take the relationship beyond transactions.

Understanding Customer Requirements:

Conducting customer surveys, on-site tracking, purchase history, and support reservation. Leveraging this data, search optimization could help keep the customer loyal. Gather and act on customer feedback to continuously improve and increase customer retention rate.

Reasons for Customer Retention in Ecommerce Business:

There are several compelling reasons why customer retention is crucial:

1. High Customer Lifetime Value
2. Lower Customer Acquisition Costs
3. Increased Average Order Value
4. Word-of-mouth Referrals
5. Valuable Customer Insights

If you own the eCommerce Shopify store, you must read: Turn Shopify Store into a mobile app.

Conclusion:

To conclude, customer retention is one of the basics of long-term success for ecommerce brands. Even though we agree that gaining new shoppers is important, keeping the customers who become a part of your loyal customer community separates ecommerce from laggards.

Ecommerce businesses must regularly check customer rates, whether monthly, once every three months, or annually. Setting a goal to improve customer retention rates by 5-10% every quarter or even annually can make a huge difference in profits.