Beyond the obvious point that it's often cheaper to retain customers than to find new ones, the value of retention is backed up time and again. Most commonly, this is quantified by a 20-year-old statistic from Bain that suggests a "5% increase in customer retention produces more than a 25% increase in profit."
The best way to improve your customer retention is by perfecting your product, which, unfortunately, is the one thing we can’t really help with. But lucky for you: there are about a dozen other ways to keep customers loyal, and we can help with those.
1 - Easy Returns Keep Customers Returning
It's counterintuitive to think about returns as driving repeat revenue, but here's the general pitch. First, pleasant return processes create good customer experiences, which we know create happy customers. According to a McKinsey study, "33 percent of repeat consumers would choose to abandon a retailer if they had a 'difficult' returns experience." This is crucial because we must be in a constant state of retainment; we can't just retain a customer once. Second, by employing something like Loop Returns, merchants can pivot those returns into exchanges, recapturing an average of 40% of revenue, and more importantly, making that sale.
2 - Subscription Strategy
In the CPG space, no lever has a bigger, redder "push me" button next to it than subscriptions. Recharge Partners and with a decade of experience in the ecommerce subscription space, we love the momentum that good subscription programs bring to a business.
3 - New Product Launches Keep Customers Coming Back for More
This is less tactical and more foundational, but especially in durable niches, catalog expansion is sometimes the only way to bring a customer back. You might know your niche and product development cycle, but we support businesses in market research, launch strategies, and marketing to support those product launches. When you sell products that don't wear out, you must expand the offer, and then you’ve got to tell people about it.
4 - Email Strategy & Segmentation
No matter the niche, email (and its cool, younger cousin, SMS) is one of your most direct ways to communicate with past customers. Doing it well can make a world of difference. This means sending the right message to the right segment at the right time, using predictive analytics to trigger nudges when a customer is most likely to reorder. Sending offers that acknowledge and are informed by past purchases builds a conversation that feels 1:1, even when it isn't.
5 - Community Keeps Customers Close & Connected
Investing in community has become one of the buzziest ideas for digital brands, and it makes sense. Building out a community—be it a Facebook group, a Circle community, or a forum platform like Vanilla—gives your fans a place to talk to each other and gives you direct access to those conversations. It’s a great way to offer VIP perks to keep good customers happy and to head off potential customer service issues by building trust and communication directly with your customers. Building a community is a fabulous way to keep customers close and engaged with your brand.
6 - Loyalty Programs Work
Loyalty programs get a bad rap as a tax on topline revenue, stacking transactions on transactions. And yet, they work. We know they work because the world continues to use them, we all collectively love our points, and when we implement loyalty programs, customer frequency increases.
Research shows that consumers who feel appreciated stay with the brand, spend more with the brand, and will advocate for the brand. Loyalty points, though basic, are a great way to show that a customer is appreciated. Moreover, earned points have to be spent, becoming a strong alternative to promotions to encourage the second or even third sale. Programs like Smile and Loyalty Lion also include referral modules, giving them some oomph on the acquisition side as well—hopefully acting like a flywheel to bring new customers on and then giving them incentives to both stay customers and invite their friends.
Loyal customers are the best customers. Let us help.
