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The Benefits of Customer Retention Over Acquisition for Ecommerce Business

Published on Wednesday, March 9, 2022

While many businesses get caught up in the cycle of growth and trying to attract new customers, they run the risk of overlooking one of the most important strategies for sustainability – customer retention.


The Challenge of Attracting New Customers

Catching the eye of new customers is tricky. With rising competition in the online world and ecommerce sites spending even more on advertising in the last couple of years, brands are feeling the pressure to keep up with the competition.

There’s also the added challenge of having to meet the new demand of heightened consumer expectations and the fact that data control and the desire for online privacy makes targeted ads more complicated. This all leads to more pressure, higher costs, and heightened efforts to achieve the goal of customer acquisition.


Why Customer Retention Matters

As an ecommerce business, customer retention is one of the greatest investments you can make. Not only does it cost less on average to keep an existing customer than it does to go through the sales funnel with a new customer, it also delivers higher return on investment in the long run. And the stats back this up. According to Marketing Metrics, your chance of making a sale with a new customer is between 5-20%. But, with a pre-existing customer, that number leaps to a staggering 60-70%. Throw into the mix the fact that acquiring a new customer is five times the cost of keeping an old one and suddenly retention starts to seem like a savvy business idea.

LimeLight Marketing - Customer Retention over Acquisition

So how do you reconnect with previous customers and keep them engaged and inspired by your brand?

We share some tips to help you focus your ecommerce business on customer retention.


Measure your metrics

It helps to know exactly where you are when it comes to customer retention and your brand. Understanding your metrics will help to paint a picture of the current landscape and give you an idea as to how many customers you successfully retain, their lifetime value, and the churn rate.

If you have a high churn rate, it may be that your ecommerce brand needs to focus on improving those customer retention strategies. You can measure your metrics by picking a period of time to follow and seeing how many customers you have at the beginning of the period and how many you have at the end. This calculator from Zendesk can help you to crunch those numbers.


Get feedback

Understanding your customers’ experience with your ecommerce brand is another essential aspect of customer retention. You want to know what’s working for them and what isn’t, so that you can be constantly improving the experience and evolving.

This can be as simple as a satisfaction survey. Knowing how your customers feel will not only provide valuable information on your strengths and weaknesses as a brand but will also help your customer to feel heard and valued. Only 1 out of 26 customers will actually voice their concerns and raise their complaints unless prompted. By providing a safe space for your customers to share their thoughts, you can prevent them from going elsewhere.

LimeLight Marketing - Customer Retention over Acquisition


Be proactive with communication

Just because a sale is done, it doesn’t mean that you should forget about the customer. Keeping post-sales engagement and connection is extremely important when it comes to retention strategies.

You can do this by having a customer communication calendar to remind you to keep reaching out and re-forging a bond with a previous customer – especially if they haven’t engaged with you for a while. It’s a fine line between being proactive with communication and running the risk of falling into their spam box. Make sure any email communication is relevant, personal, and well-mapped out over a period of time rather than bombarding your customers with irrelevant messages.


Get personal

The personal touch matters and has always been at the heart of great customer service. Your customers want to feel like you know who they are and that you care about them as a person and not just a number. 80% of frequent shoppers say they only buy from brands who have some level of personalization, which shows that the majority of buyers really value the personal touch.

You can give your communication the personal touch by using information such as name, age, geography, previous purchases, and any other relevant info to make your emails, ads, offers, and support a more tailored experience. You can also implement omnichannel support strategies, so your customers have a coherent and streamlined experience rather than feeling like ‘they start again’ every time they interact with your brand.

LimeLight Marketing - Customer Retention over Acquisition


Share knowledge

Ecommerce brands that share knowledge instead of becoming gatekeepers of it can also boost their customer retention opportunities. By offering your customers advice and tips, or delivering a great onboarding service, you create a relationship based on trust, mutual respect, and education rather than codependency.

By offering step-by-step guidance, online tutorials, videos, pictures, newsletters, and information that helps your customers understand your product or service in more detail, you can help to strengthen the relationship in a way that feels authentic and doesn’t just rely on the same old ‘seller – buyer’ narrative.

Keep their trust

Just because someone purchases a product or service from you, doesn’t mean they immediately trust you. Trust is hard to garner and once you have it, you should make sure that you don’t lose it. When you retain a customer’s trust, you retain the customer.

This means:

  • continually delivering on great customer service,
  • offering high levels of support and aftercare in the post purchase stage,
  • responding to any issues or inquiries as quickly and positively as possible.

It also means implementing transparency and respecting the customers wishes and privacy when it comes to communication.

LimeLight Marketing - Customer Retention over Acquisition


Reward loyalty

Showing appreciation for your customers’ business is an important part of the retention plan. It’s important to acknowledge that there is choice and competition out there and to show gratitude that your customers have chosen to stick with you.

Loyalty reward programs can go a long way when it comes to customer retention. 75% of customers say they are attracted to brands that offer loyalty rewards.There are many different ways you can reward loyalty. From personalized offers to points-based systems, tiered reward programs, and discount codes – these methods are also a great way of upselling and incentivizing sales with your brand.

By recognizing that customer retention is an integral part of sustaining and growing your business, you can redirect your efforts into deeper long-term relationships with your customers without blowing your budget. Customer retention is worth its weight in gold and by implementing these strategies, you can serve your ecommerce business well for many years to come.

Brandee Johnson
Founder, CEO