Retention in E-commerce as a Way to Survive a Crisis

What’s More Difficult for You: Starting a Conversation with a Stranger or Someone You Know?

It’s obvious that it’s easier to engage in a dialogue with someone familiar. Naturally, we trust people we know. We listen to them more carefully, respect their time, and value the information they share with us.

The same goes for brands. We’re more likely to engage with the ones we know and have a relationship with. As consumers, we appreciate brands that can engage in a dialogue with us and be responsive.

However, from my observations, apart from large global brands, it’s hard to find companies that engage in organized dialogue with their customers. This is even more surprising in the e-commerce sector, which is brimming with data about consumer preferences and is fully equipped with communication tools.

Competitive Advantages

E-commerce platforms have access to a vast database of various manufacturers’ offers, which can be used to build a competitive advantage by helping customers choose the best product for their needs.

The key is understanding why a customer would buy a product from you rather than a competitor. What non-price arguments or factors that compensate for price differences provide value to the end customer? Every e-commerce platform owner must be able to answer this question. Based on my market observations, formulating these advantages—or even simply realizing they exist—constitutes 70% of success. The rest lies in communicating this knowledge to the customer.

Customer Segmentation

E-commerce platforms build massive knowledge bases about their customers, often unintentionally collecting detailed data on their purchasing preferences, only to use about 10% of that information.

Your customer database is the most valuable asset in your business, especially online. The sales process alone provides you with several to dozens of parameters about the consumer, and regular, personalized communication can provide unique insights that cannot be obtained during the purchasing process. Business Intelligence can transform this data into information and then into knowledge that is invaluable and unique to each business.

Why Is This Important?

Acquiring a new customer can generate costs up to seven times higher than driving repeat purchases from an existing one. Increasing retention by just 5% can boost profits by 25% to 95%.[1] Efficiently leveraging the knowledge stored in your data allows you to precisely target micro-segments of customers with personalized messaging, significantly increasing the chances of repeat visits to your store—and, as a result, more purchases.

Use the data you have about your consumers, and then tailor the content you send them. Sending the same message to everyone is inefficient. While in the beginning, the more contacts, the better for conversion, it’s important to segment your database, focusing primarily on the most valuable contacts.

Here’s one way you can do it:

• Spend 75% of your time on active contacts;
• 25% on re-engaging contacts;
• 5% on those hard to re-engage—these are the contacts who do not respond to your communications and are of the least value.
  
  

Customer Loyalty

Retention, which we nurture in this way, is the foundation of customer loyalty—one of the key goals of marketing efforts. From an economic standpoint, loyalty means optimizing media costs. Instead of spending huge budgets on Google Ads, Meta, or other channels, we generate sales from our own resources. You can use email or SMS marketing to achieve this.

It’s surprising how many e-commerce businesses, despite having massive customer databases, do little or nothing with them, or engage in mass communication without personalization, while simultaneously spending hundreds of thousands on acquiring the same customers through Ads or Meta.

Once we acquire a customer and pay for it through ad providers, the primary marketing and economic goal is to stimulate repeat purchases—using the knowledge the customer has provided and through our own cost-free communication channels.

Retention Tactics

Here are three retention tactics you can implement in your e-commerce today:

1. Onboarding

This is a series of welcome emails that extends the initial communication over time, allowing the customer to get to know your brand better. Emails sent over a few weeks gradually provide information without overwhelming the recipient. They serve to communicate what the brand represents, what solutions it offers, how your products or services can help the customer, and why they should build a relationship with you. It’s a setup for future communication. The customer knows what to expect in the next messages.

The first email you send to your customer has the greatest impact. Make sure to use it wisely!

How’s the click-through rate?

2. Loyalty Rewards

Ask yourself two critical questions: „How do you encourage your customer to stay with you longer? And how do you reward them for their loyalty?” The first thing that comes to mind is price discounts. Does it work? Not necessarily. We see this with dietary catering services, which offer up to 30% discounts to retain customers or acquire new ones. Discounts alone (especially those given out ad-hoc) do not build loyalty. If the customer is not attached to the brand, they will simply go wherever the price is lower. So how do you show your customer that you care about them? And how do you reward them for choosing you again over the competition?

For your loyal customers, prepare a list of exclusive benefits you can offer them, such as:

• Early access to offers
• Access to new features or solutions
• Rewarding them with samples or new products
• Upgraded versions for loyalty (e.g., if you sell SaaS or software)
• The option to choose a free gift with their order
• Complementary products or services

3. Engagement and Responsiveness

There’s a lot of talk about personalization, but it often still comes down to very basic tactics like using a customer’s name in an email or showing recently viewed products. Meanwhile, customers expect brands to respond to their preferences.

Customers want to choose the content that interests them, as well as the methods and frequency of contact. They want to share their product preferences or interests with the brand. Over 30% of respondents consider “choosing content” they receive from the brand as the most important feature. Give your customers the option to choose, ask about their preferences, and tailor content to meet their expectations.

If you show the customer they have an influence on your brand, you’ll earn their loyalty. Even if this control is only perceived, your customer will appreciate the opportunity to engage—especially if they see personal benefits.

How else can you reward engagement? Recognize your customers! As consumers, we love taking pictures of ourselves and our surroundings (no wonder IG is still so popular), and we naturally want to showcase the brands we like. Give your customers the chance and space to engage this way, appreciate it, and be responsive.

Conclusion

Communication aimed at retention should be:

• Organized: Don’t send chaotic messages to everyone. Plan your communications. For example, send educational content on Mondays, brand stories on Wednesdays, promotions on Fridays, and surveys on Sundays.
• Planned: Planning your communications allows you to prepare topics and content more accurately. Plan quarterly, so you can calmly build your content calendar.
• Personalized: Use the knowledge you have about your customers. Automate the process and create micro-segments.
• Valuable: Consider how your customer will benefit from the content you want to send. Minimize sales-heavy content. Loyal customers don’t need to be pushed into purchasing.
  
  

Remember, building loyalty revolves around the customer experience.

• Show your intent to build unique relationships with customers
• Ensure frequent customer interaction
• Create space for customer integration
• Gather and analyze customer information
• Provide valuable content
• Invest in your customers by offering value beyond the product
• Implement a personalized approach using marketing automation

Sources:

​​[1] „40 Customer Retention Statistics You Need to Know 2020,” available at www.getfeedback.com [accessed on 12.10.2022].