Customer Retention Marketing Is Where It All Begins

Tom Montag 6 min read April 26, 2021

Ecommerce is booming, but attracting new customers is becoming more difficult and expensive. How do you advance in a cutthroat environment? You work with the resources you already own – and have paid for!

Retention marketing allows you to sell to your current customers.

What is customer retention marketing, and how does it work?

It is trying to retain customers for longer periods of time, purchasing more often and in larger quantities. It is a concerted marketing campaign aimed at generating repeat business and loyal customers.

It's the polar opposite of depending on one-time consumers, where you have to constantly attract new customers and let them go after just one purchase.

Definiton of Retention Marketing

Retention marketing in ecommerce refers to the practices that keep customers coming back.

Its aim is to optimize a customer's return. Customers' loyalty is earned by retention marketing, which proactively uses data for ongoing interaction, personalization of the shopping experience, and winning customer loyalty.

Getting a new customer is five times more expensive than retaining an existing one.

A new customer has a 5-20% conversion rate, while an existing customer has a 60-70% conversion rate.

When a consumer returns, the benefits of retention marketing compound over time, lowering prices and increasing earnings.

Retention marketing's advantages

When you prioritize retention marketing over constant acquisition, you'll see a rise in ROI and if you pay to attract a customer, they'll place more orders, paying off youtr intitial outlay and maximizing your profits.

Reduce the cost of each sale Since retention depends on owned networks (emails) of which you have complete leverage, you won't have to depend solely on acquisition to make sales.

You won't have to invest in driving traffic forever to expand.

Shorten the purchasing period – committed consumers purchase more often, resulting in steady cash flow.

Customers would be happier as a result of the deliberate effort to do them well, which will lead to loyalty and word-of-mouth referrals.

Bolster your brand – The more devoted fans you have, the more appealing it is to others.

Retention metrics that matter

How can you tell if your attempts to retain customers are effective? You should track the health of your retention in the same way that you monitor the health of your traffic, conversions, and other important ecommerce metrics.

Percentage of repeat customers

This is also known as the repeat purchase rate, and it is the percentage of customers who return. It reveals whether you are able to keep customers or whether you are to losing their repeat business and orders.

Frequency of orders

That is the average time between orders or the frequency at which people buy from you. Days, weeks, months, and even years will pass.

Knowing how much your customers shop with you allows you to perfectly time your marketing strategies and generate more orders with less effort.

Ordering frequency

This is the average time between orders, or how much people buy from you. Knowing how much your customers spend helps you to time your marketing campaigns perfectly and produce more orders with less effort.

The lifetime value of a customer

That's the total amount a customer has ever spent in your shop. In ecommerce, it's potentially the most critical retention metric. It aids in the planning of acquisition budgets and the estimation of sales targets.

Retention marketing is one of the key drivers of profitability in any business, brick-and-mortar or online. The cost of retaining an existing customer is far lower than than the cost of acquiring a new client.

If your business is in need of some retention marketing smarts, get in touch with one of our success managers and we'll help you optimize your retention marketing metrics.

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