Reduce Customer Retention Costs With Mobile App for Shopify Stores

Customer retention is an alarming term! With hundreds of online stores selling almost the same product within the same price bracket, it is difficult to convince customers to stay loyal to your online store.

Retaining customers is an important aspect to focus on! Customer retention gives you a safe space in cutthroat competition. You can shift your focus to increasing sales rather than focusing on how to bring customers to your website.

With the help of customer retention, you can expect a particular number of sales every month.

What is Customer Retention Cost?

As you must have noticed, customer retention is the main ingredient to running a successful online store or business.

Imagine spending thousands of dollars every month just to gain new customers. Focusing more on retaining half of the customers daily will help you spend less and gain more!

Since we have placed enough emphasis on customer retention, let's focus on what the customer retention cost is.

Customer retention cost, in simple terms, means the amount that one spends to keep one customer buying from you for as long as possible.

The cost of customer retention may include:

• Platform or app development cost
• Product upscaling and upgrading
• Customer support initiatives

You might have done advertisements, brand promotions, coupons, and discounts to acquire the customer base these all shall be considered while calculating the customer retention cost.

Did you know that repeat customers spend 67% more than new customers? Well, that's quite a fair reason to focus on customer retention costs for your online store.

Since you have understood the impact of customer retention cost, it is very important to understand the correlation that the higher the customer retention cost, the lesser the profit.

How Will Mobile Apps Help Reduce Customer Retention Costs?

Higher customer retention costs will not only act as an add-on expense but will also make it difficult to keep spending the same fund (amount) in the future for customer retention.

After buying from your online store for the first time, a customer has a 27% chance of buying again. After a second purchase, there's a 49% chance they'll buy again. And after a third purchase, the likelihood increases to 62%.

Since the importance of customer retention is non-negotiable, one needs to put his heart and soul into bringing down the customer retention cost.

It is believed that using an app will help to a greater extent.

Wondering how?

An app will help you overcome a lot of expenses. Yes, it is a big investment, but kindly underline it is a one-time investment!

Push notifications can draw customers' attention in a fraction of a second! With the app, you can send multiple push notifications whenever you want.

New launches of products can easily spread the word. Applications can have a separate section for newly launched products.

Insights will help you understand the star product; therefore, you can plan discounts and offers accordingly.

There are a lot more benefits that can put light on the benefits of using an application for your Shopify store.

Think if you didn't have an app to communicate with your customer base; then all the above perks would have been easily converted into add-on expenses.

Importance of Customer Retention in Shopify Store

Customer retention is important; by the time you have started reading the blog, we have mentioned this again and again.

But why is it important?

To focus on the importance of customer retention, let's consider an example.

Man A: Owns a Shopify store of electronic products; he has a good range of products, constantly updates the stock with time, and has a decent customer base.

However, he doesn't have an application for his online store. He spends on advertisements to build brand awareness.

Man B: Owns a Shopify store of beauty products; he has high-brand products and has an application for his Shopify store.

On the occasion of the Black Friday Sale, Man A spent 30% of his income to promote the products, whereas Man B used his application to communicate developed by Leo Apps about offers, discounts, and more at no cost.

Moreover, whenever Man B updates his stock, he puts an advertisement about new stock, new products, and their utility on the banner space of the application!

Also, the LEO app developed the application precisely enough that Man B can provide minute as well as detailed updates about their order, like when the order was placed, when it was dispatched, etc. Therefore, customers are more connected to him.

Hence, it becomes really easy to retain them!

How to Calculate Customer Retention Costs?

Calculating customer retention costs is not too technical, but it is important. Making a small mistake could change the figures, and you'll not be able to understand the number game.

In school, we had a formula to calculate different expenses. Similarly, there is a Sage formula for calculating customer retention cost for the same first unit to understand a few terminologies and the expenses that are input to reach the customer retention point.

One cannot directly derive the customer retention cost. For the same, you need to consider other costs that revolve around the concept of customer retention, as those costs have directly or indirectly. Contribute it to retain the customer for your online Shopify Store.

So let's identify a few costs that will help you reach the final amount of customer retention cost.

• Advertisement Costs
• Customer Loyalty Programs
• Tools and software used
• Customer feedback collection cost

Any cost spent on either getting customers or knowing them, like discounts, coupons, etc.

Make a total of all the expenses mentioned above or any other expenses you have incurred regarding gaining a customer or making them convert into a loyal customer.

Expert Strategies to boost organic traffic of Shopify store!

By calculating the cost of. as mentioned above, make sure that you are considering it for a particular frame of time. For example, you are considering the cost that has been spent in the first quarter or monthly on a bimonthly basis or on a retail basis. The time frame should be selected to get accurate numbers.

Once you have a total cost incurred, say, in a month to gain and retain customers, you have to open your Shopify store's insights to understand how many people or customers have purchased products from your website in the same month.

Now let's understand how to calculate customer retention cost. With the two expenses, we can use it directly to get the customer retention cost.

Customer Retention Cost = Total Retention Expenses / Number of Retained Customers

Conclusion

Customer Retention Cost is a very crucial figure to concentrate on. It will give you deep insights about the business and you can understand the positioning of your brand.

Any Shopify store owner should prioritize keeping customers. By combining these tactics and customizing them for your unique Shopify store and target market, you can increase client retention, foster brand loyalty, and eventually propel long-term business success.

Keep in mind that establishing enduring bonds based on value and trust is essential to effective client retention. Keep an eye on your retention efforts and make necessary adjustments based on performance statistics and client feedback.