What is customer retention?
Customer retention is when businesses employ a range of activities to engage existing customers and encourage them to continue purchasing their products.
Customer retention explained
When a business employs customer retention activities, its focus is to turn one-time buyers into repeat buyers. Also, it encourages customers to always choose its products over other items available in the market. The concept of customer retention differs from customer acquisition, which is about gaining new buyers. Acquiring new customers may seem like a better strategy for growing a brand. But customer retention is more effective and costs seven times less than acquisition activities.
Customer experience is an essential factor in customer retention. The customer experience starts when a consumer first discovers a brand. From there, the experience grows positively or negatively, according to their first impression. The experience can develop when the consumer makes their first purchase and becomes the brand’s customer. From there, the brand can initiate various customer engagement activities to maintain and develop that relationship.
For example, a potential shopper can first discover a brand on Instagram and start following its account. The relationship builds as the user visits the brand’s store and buys a product. The brand can then engage the customer in retention activities like brand content, marketing messages, and product recommendations. These activities will succeed when the customer returns to buy more products from the brand.
Customer retention strategies allow businesses to add value to their customers’ brand experience and increase loyal customers.
The value of customer retention
Customer retention can be valuable for any brand. Here are some ways that brands can benefit from the strategy:
- Cost efficiency: Retention is cheaper than acquisition since there’s less money spent on advertising and marketing to an existing customer pool.
- Increased average order value: Loyal customers spend 23% more in a store than the average customer.
- Increased conversions and profits: Salesforce notes that the likelihood of converting a potential buyer into a customer is 5-20% while converting an existing customer into a repeat buyer is 60-70%. Also, increasing customer retention by 5% could lead to a 25-95% increase in revenue.
Types of customer retention activities
There are numerous strategies and activities to gain repeated business from customers. Here are several that will keep customers coming back for more.
- Communicate and engage: A brand must make an effort to communicate with a customer to build a relationship. Although social media is rising to popularity, email is still a powerful communication tool with a 44 dollar return in engagement for every 1 dollar spent. Brand emails can cover a wide range of engaging topics, from new product alerts and special offers to reminders for items left in shopping carts.
- Create a loyalty program: Earning rewards for every purchase can compel customers to make repeat purchases. As long as the brand offers something of value, a loyalty program can significantly impact customer retention.
- Ask for feedback: Asking for feedback keeps the customer feeling engaged in the brand’s product and service development. It’s also a way for a brand to gain insight into the customer-side of the shopping experience.
Improve retention with Cafe24 apps
Cafe24 understands customer retention value and works with its ecosystem networks to help merchants employ relative strategies.
The Cafe24 Store provides a variety of tools that can help improve customer retention rates. Merchants can use the Smart Recommendation tool to offer personalized product recommendations and increase conversions. Other marketing tools like Plus App help engage customers by sending regular push notifications via mobile. The RemindMe function creates alerts for items left in the shopping cart.
With a combination of retention tools, Cafe24 merchants can increase customer engagement, boost store traffic, improve brand loyalty, and increase profits.