The biggest win in ecommerce is the moment your newest customer becomes a repeat customer. While you might spend 80% of your budget acquiring first-time shoppers, the ones who fill their carts a second time will eventually represent the bulk of your business; according to an Adobe report, 40% of total revenue in the United States comes from repeat customers, even though those customers represent only 8% of all visitors.
The fastest, most profitable path to retail growth is through your existing customer base. Unfortunately, many businesses emphasize customer acquisition over customer retention. If you doubt that your No. 1 job is to compel customers to make a second purchase, consider these arguments in favor of retention initiatives:
Make a great first impression… and even better second and third (and so on)
A recent Zendesk survey found that 82% of shoppers – including repeat customers – have walked away from a business because of poor experiences. The process of nurturing your customer base is one that should not have an expiration date. Show repeat customers you value them, or they’re susceptible to churn.
Customer lifetime value (CLTV) numbers do not lie
The longer you retain your customers, the more they are likely to spend. RJ Metrics has reported that 53% of customers who make a second purchase come back, and 64% of those who have bought from you three times will buy from you again. The farther you follow this pattern, the better it looks. After nine purchases, 83% of your customers will buy for a 10th And, on average, returning customers spend 67% more than first-time buyers.
You’ll spend 5 times more on customer acquisition than retention
Forrester Research found the metric that marketers can’t afford to ignore. The returns are better on retention and the costs are lower.
Campaigns that get it right on retention
To make the most of your most profitable customers, stop treating all of them the same and start basing your communications with them on their behaviors, both in the past and in real-time. The first step in that process is to make sure you have a single source of the truth about who your customers are and how they behave. They might be using up to five different devices within the same purchasing cycle, according to DigitasLBI, so the first step in retention campaigns should be unifying your view of customer activity across web, mobile, email and other channels. When you stitch all those touchpoints together, you’ll discover your customers’ needs and preferences. You can then meet them in a timely manner to increase the likelihood of additional purchases.
There are several types of campaigns to embrace as you reprioritize retention over acquisition. Start with a welcome series to jumpstart new relationships with a few emails over the course of several days. Show recipients what it’s like to be a customer of your brand, make them a promotional offer, showcase some of your top-selling products or create a personal incentive. Multiple touches are important, since it takes about seven contacts with a prospect to get a sale.
Also consider creating customer-centric cart and product detail page abandonment campaigns to increase your conversion rates. Using technology like a B2C CRM, marketers can view the full picture and capture customer interactions across every channel and device. These single customer views then provide the information they need to trigger emails to send within an hour of the customer’s activity and make contextually relevant offers. Price sensitive customers should get a time-sensitive coupon, for example, or you can curate a range of products related to the abandoned item to re-engage with customers who didn’t find quite what they were looking for.
To further the relationship and feeling of personal connection, think about creating birthday campaigns or loyalty programs. Just as importantly, segment out your at-risk customers to engage with them before they walk away. If you’ve been communicating with these fading buyers via email, you might execute your at-risk campaign over Facebook to catch their attention on a new channel. This is a tactic you can also use in win-back campaigns, which are similar to new customer acquisition, except with all the data insights you have from previous transactions.
According to research from “Marketing Metrics” by Paul W. Farris, you have a 60% to 70% probability of selling to an existing customer. That number drops as low as 5% for new shoppers. While your first-timers are important, retaining existing customers is crucial. For retailers intent on sustaining and growing healthy businesses, customer retention should be a top priority.