Customer retention is the collection of activities a business uses to increase the number of repeat customers and to increase the profitability of each existing customer.
Customer retention techniques help you to offer more value from your current customer base as well as gain more.
When to Focus on Customer Retention
Whether you should focus more on customer acquisition or retention is heavily influenced by where your store is in its lifecycle.
A store that started yesterday is vastly different than the one that’s been up and running for many years.
1. Just Starting
There is one thing you should be working on when you have just opened your store: attracting customers.
Your acquisition efforts will trump retention altogether at this stage. Concentrate on plans and techniques to help you expand your customer base.
2. Gaining Traction
Now you have customers and sales are sporadic. You may start incorporating retention elements at this point, to encourage each customer to buy more.
Start with retention email campaigns that focus on encouraging a past customer to purchase from you again.
3. Consistent
You’re not quite a juggernaut of eCommerce, but the sales are increasing. This is the point where you should start thinking about mixing with your acquisition efforts in greater retention.
For marketing automation, you should look at starting a referral and/or a loyalty program as well as something more serious.
4. Established
You are now an e-commerce store that has built itself. A common challenge for that size retailers is finding ways to keep increasing.
An acquisition can lead to a lot of one-time sales, but a retention plan will encourage consumers to buy more regularly, which increases their value for life.
You should be careful about the retention attempts at this point and be cautious.
5. Well-Established
At this stage, your store has made it past the initial gauntlet. You’ve achieved many early successes and you have a lot of processes and automation in place.
For instance, every store in the graph below has 100 customers buying a $10 item every month. The light purple store holds 5% of those customers every month and the dark purple holds 10%.
So, the increase of 5 percent will lead to rapid growth, which is difficult to balance with straight acquisitions.
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