Powerful Techniques For Boosting Customer Retention Rate
A repeat purchase from a customer is more cost-effective than finding new ones. The cost of clicks and conversions always seems to increase for businesses, especially in crowded e-commerce arenas. Do you ever seek ways to reengage customers so that they come back again? It’s a good time to build a customer retention strategy for existing customers if you haven’t already done so. Read on for more information. What is customer retention? A business that retains its customers focuses on activities that will increase the number of repeat customers and the profitability of each of them. You can enhance the value you provide to your existing customers through retention strategies. Ideally, the customers you worked so hard to acquire will stay with you and will experience a truly exceptional customer experience. Essentially, customer acquisition is the first step toward building relationships with customers and maximizing revenue for each one. Customers are re-engaging through customer retention. But what are your time and resource requirements? This will depend on your business. What Metrics Must You Consider In Building Customer Retention Rate? Understanding the underlying metrics of customer retention is the key to an improved customer retention rate. Which metrics should you focus on? Are they measurable? How can they be improved? Your store’s profitability will be significantly and lastingly increased if you answer these questions. We will examine why customer retention metrics are important by looking at the three most important ones. Repeat customer rate Purchase frequency Average Order Value (AOV) 1. Repeat customer rate Keeping customers is driven by repeat business. The return on investment from your customers is measured in this metric. Keeping track of your repeat customers is an excellent way of evaluating how well your retention strategy is actually working. The higher this metric is, the more willing customers are to return to your store. How to calculate repeat customer rate There are so many complicated calculations to keep track of in calculating retention metrics. You only need two pieces of information to calculate your repeat customer rate: A. Customer purchases multiple times More than one purchase has been made by a customer in a specified time frame. To see an overall picture, look at the whole year. B. Customers who are unique Customers who purchased your products during a specific time period are included in this statistic. Order numbers are not included in this statistic. When you write out this equation, it looks like this: # of Customers That Purchased More Than Once / # Unique Customers 2. Purchase frequency You can find out how frequent your customers buy from you from the purchase frequency. The fact that repeat customers account for a significant portion of a store’s annual revenue-depending on the category-makes this even more crucial. How to calculate purchase frequency You can calculate your store’s purchase frequency in the same way you would calculate repeat purchases. Divide your store’s total number of orders by the number of unique customers over the same time period you chose for your repeat purchase rate (e.g., one month). When you write out this equation, it looks like this: # of Orders Placed / # Unique Customers 3. Average Order Value You need to maximize how much each purchase is worth once you know your repeat purchase rate and frequency. An average order value is a metric that indicates how much money your customers spend in each transaction in your store. How to calculate Average Order Value If you have set a time frame for your repeat purchase rate, you should use the same time frame for calculating your average order value. Divide your annual revenue by the number of orders processed by your store. When you write out this equation, it looks like this: Total Revenue Earned / # Orders Placed What Timeline Does Customer Retention Take Effect? Depending on where your store is in its life cycle, prioritize customer acquisition or retention. It differs greatly from a business that has been operating for many years from one that just opened yesterday. 1. Starting a new store: When you are just starting out, your primary concern should be getting customers. Acquiring new customers should completely override keeping customers. Develop strategies and tactics that encourage your customers to stay with you. 2. Getting traction: You have customers and you are getting occasional sales. Now, you can start implementing retention elements to increase each customer’s purchase frequency. Starting with a retention email campaign that encourages past customers to return would be a good place to begin. 3. Consistent: Your sales are growing, but you’re not a juggernaut in e-commerce. It is now that retention should be incorporated into your acquisition strategy. Besides an incentive program, you might also want to look into getting more serious about marketing automation. 4. Establishment: You now operate an e-commerce store that is established. Small retailers often struggle to continue growing. It may seem that acquiring customers will lead to many onetime purchases, but keeping them will make them spend more often, thus increasing their lifetime value. It is important that you focus on retention at this stage. 5. Respected: You have survived the initial firestorm now that your store has become well-established. There are many processes and automation in place that have helped you to accomplish many early goals. The time has come for you to prioritize retention. Your strategy should be tailored to how your store fared during its current phase as well as what you sold. Methods for Increasing Customer Retention Rate The benefits of building a strategy to retain our existing customers are just as important as acquiring new ones. As well as this, we calculated what we should monitor to stay on track. Here are some suggestions for improving customer retention. Utilize customer accounts Customer service should be improved Set up a customer loyalty program Communicate with customers in an engaging manner Give a return credit or discount 1. Utilize customer accounts Customer accounts can be both good and bad.