Thursday, November 8, 2012

How online retailers can improve customer retention

Understanding how to retain the customers that you have spent money acquiring is vital for any online business. 
 
Attracting a new customer can cost five times as much as keeping an existing one, so companies need to pay as much attention to retention as they do to acquisition. 
Here are 21 tactics e-commerce firms can use to keep customers coming back for repeat purchases, and avoid losing them to competitors... 

Customer retention: the stats

  • Loyalty programs and rewards were the most popular factor (39%) in persuading customers to make repeat purchases, followed by strong after sales support (20%) and personalised offers after purchase (14%).
  • An infographic from Zendesk paints a slightly different picture, as it found that a third of consumers (34%) believe that exceptional customer service is the best way to build customer loyalty compared to 20% who want rewards and 13% who want exclusive or relevant offers. A further 54% of respondents said they would consider increasing the amount of business they do with a company in return for loyalty rewards. 
  • Attracting a new customer costs five times as much as keeping an existing one. (Lee Resources 2010)
  • Globally, the average value of a lost customer is $243.(KISSmetrics)
  • 71% of consumers have ended their relationship with a company due to poor customer service. (KISSMetrics)
  • The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20% (Marketing Metrics)
 

So how do you increase customer retention?

Of course, the fundamentals are important. Among other things, you need a great product,and you need the right kind of pricing (not necessarily the cheapest), and to offer excellent customer experience. 
As the stats above suggest, customer service is all important, but rewards for loyalty and personalised, relevant offers also work well. 
Here are 21 tactics to improve customer retention rates..

The importance of delivery for retention

Get the last mile right

Delivery can be a pain for online retailers. They may sell great products, provide an excellent online experience, yet the final step in the process is in the hands of third parties who don't necessarily share the company's values. 
Here, a reliable courier and close monitoring of service levels helps, but you can also keep customers informed on the progress of their delivery, and make the process as convenient as possible. 
Kiddicare's SMS service is an excellent example of this. Customers can be kept informed of despatch and delivery by text, and also have the option to rearrange delivery if they want to. 

Get the packaging right

Not all retailers have complete control over the delivery process, but they can ensure that the packaging has that 'wow factor', as in this example from Burberry: 
 

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