Over 40% of internet users have made purchases online which translates to over 1.12 billion people While the precise number of eCommerce stores is unknown, we know the marketplace is growing and new challenges are being presented to stores big and small. One of the biggest issues is customer retention: how do you encourage customer loyalty and have people returning to your site? How do you make your storefront more attractive than the thousands of competitors that appeal to your demographic?
The Dollars and Cents of Content Retention
Customer retention essentially means you have an audience of returning shoppers. They may choose you because you are the cheapest, the best, or the brand speaks to them. There can be a lot of different reasons, but the main point is that they’re return visitors and you’ve built up a rapport with them.
According to a study by Bain & Co, increasing customer retention rates by just 5% increases profits by 25% to 95%. And according to a study by Lee Resources, attracting a new customer costs five times as much as keeping an existing one. KissMetrics estimates that the average global value of a lost customer is $243 each. They also estimate that selling to an existing customer is 60%-70%, while selling to a new prospect is 5%-20$. We speak about the value of trust in a previous article. On a purely financial level, it makes more sense to retain as many customers as you can rather than constantly replacing them with new ones.
Enterprises appear to spend up to 80% of their resources into expanding into new markets rather than retaining the ones they have. The reason may be that it’s difficult to connect with customers electronically and we begin to see them as numbers and graphs rather than people who can make value-based decisions. As eCommerce begins to achieve more value, the deciding factor for the survival of many small-to-medium sized eCommerce stores will be how they service their niche, not how fast they can expand their niche.
Customer Behavior and Brand Evangelism
For the same amount of effort to sell something, expected sales as such is higher from selling to your loyal customers.
Personalization has always been the key to increasing customer loyalty. Even considering brick-and-mortar stores, a big component to whether or not you return is whether or not you believe the store actually cares about you. In the eCommerce sphere, you see this with Amazon when they send customers an email after a purchase containing information on similar items. Little examples such as that work wonders for boosting loyalty and making the customer feel like they’re experience is being looked into.
You see this sort of personalization with customized promotional offers and in recommender engines that provide product recommendations based on previous purchases and behavior, generated in real time. The more someone wants to come back and the more loyalty they feel, they turn into what we call “brand evangelists.” That means that they identify with your brand/store so much that they will go out of their way to send more traffic your way without an incentive. If you put your resources into operating in the individual’s best interest, they will return the favor not only in sales but in positive promotion and new customers.
What this Means for Large Retailers
If you’re an eCommerce platform with a very well-defined niche and you’re able to brand yourselves uniquely, it will be easier for you to leverage loyalty to create brand ambassadors; it’s far easier to “humanize” yourself and create a very targeted brand identity. For larger stores that are competing on selection, price, or availability this is a tougher angle to take. In these cases, loyalty is found through ease of access to what they want, not so much relying on them exploring your catalogue over a period of time.
To capitalize on the “human brand” and encourage return visits, you must rely on making things easier for the consumer to find that they want. This included targeted promotions, landing pages, and recommender engines that deliver products that they didn’t know that they wanted yet. Brick-and-mortar stories in the ecommerce sphere tend to struggle with this since approaching the same demographics in different ways can be confusing.
The overall point is, if you can’t be the most human, be the fastest. With eCommerce stores coupled with advances in technology it’s becoming easier and easier to provide a fast shopping experience to consumers. The trick is, keeping up the pace so that eventually people identify stores both large and small as “the place where I can easily find what I want.” Once you begin to build that trust, it can easily develop into brand evangelism and promotion.