In an increasingly competitive eCommerce environment, with costs of customer acquisition skyrocketing, customer retention becomes more important than ever. Meanwhile, many eCommerce stores not only don’t measure retention in any way, but also don’t know that they should. How come? This data is difficult to extract from the systems, the company’s goals are usually elsewhere, and the effect of retention activities is usually delayed in time.
Customer retention is measured using the so-called retention curves. They show how many customers return to an eStore over time. If that number is not high enough, then there’s a serious risk of your business depending solely on acquisition. And once your acquisition budget becomes smaller, your store will suffocate due to lack of returning customers.
What Stops Customers from Making Another Purchase at Your Online Store?
So, if you’ve just checked it and you know that customers only buy from you once, you should try to figure out why they don’t come back. These are the most common reasons:
- The product you sell does not meet their expectations – or in other words, it does not solve the problem as promised or it does not deliver the promised benefit. Solution? Provide a better product 😉
- Their first shopping experience in your eStore was negative – e.g., they were not properly updated on their order status, shipment was delayed, parcel was difficult to pick up, etc. Solution? Improve your customer service.
- Your store made a poor impression compared to the competition. It may be that a customer has made similar purchases in several online stores, compared the overall experience and your store simply fared less well. Solution? Work on your shopping conditions.
- You abuse discount codes. It may well be that you have taught your customers that they will receive a free discount on their first purchase for subscribing to your newsletter. So, they do come back but they use a different email address each time to claim the discount. Solution? Stop abusing discount codes and start verifying if your customers are not placing orders from different email addresses to the same delivery address.
- Your product is just the type that can be purchased once. Solution? Take care of the so-called top of mind, i.e., make sure your customers remember about your eStore when making their next purchase.
- Your client activation process is not effective – you treat all your clients the same and you don’t onboard and activate them properly. We discuss solution to this problem below.
What Is Client Activation?
But let’s start with the definition. If all your new customers fall into the marketing automation tool that simply sends them a couple of cross- or upselling emails in the following days or weeks, then you’re not doing it properly. Customer activation is the process of building a buying habit that is measured with a specific goal. The buying habit takes a long time to build, which requires patience.
There is no single formula for making a particular goal effective for every eCommerce store. For starters, expect the customer to perform a certain action x times in the first y days after purchase – with x and y being values that you need to figure out for yourself depending on the type of stuff you are selling. Remember that the x and y values must be constantly monitored and calibrated accordingly.
How to Effectively Activate a New Client?
Okay, so how do you go about it? Here are the four basic steps:
1. Focus on their first experience.
Knock your customer’s socks off. We know that with so many stores improving their customer experience and customers having higher and higher expectations this is more and more difficult to achieve. But don’t let this discourage you. Add a small, useful gift to the first order (e.g., a useful branded bag, or a bookmark) that has not been promoted in your marketing communication and will be a pleasant surprise for the customer. Or put a personalized handwritten message on the package (e.g., the name of the customer’s dog if the customer ordered dog food). Not only will you surprise them, but also encourage them to share it on their social media, which will increase your reach. Oh, and remember that the product you sell must be of great quality 😉
2. Onboard them properly.
Start with their very first order. Add a welcome leaflet to their parcel, containing useful information about the purchased product (e.g., how to store this hypothetical dog food), or about making next purchases, or joining your loyalty program. Let them know what is awaiting them in the future, so that they can consider having future interactions with your eStore.
3. Ensure two-way communication.
Ask customers to evaluate their first shopping experience. This will allow you to single out dissatisfied buyers and focus on “saving” them for your eBusiness. Always send messages signed with the name of your real employees and listen to customer replies. Use this forming relationship with your customers to find out what needs to be optimized in your processes – and do take time to optimize it.
Instead of a Summary
A skillful activation of a new customer will allow you to significantly increase the customer lifetime value (CLV) for your online store. A large number of such customers, in turn, will be a good justification for undertaking more ambitious and expensive acquisition activities. Remember also that the longer a customer stays with your online store, the greater the chance that (s)he will become your ambassador and recommend you to his or her friends.
Customer retention is, of course, a much more extensive topic, but if you start with what we’ve just suggested above, you’ll be on the right track to do it right. Remember that retention is not only a matter of building customer shopping habits. It is also a matter of building your own retention habits!