Investments in customer retention works out cheaper than customer acquisition. Here are a few ways to improve your retention strategies.
What is customer retention?
Customer retention refers to a company’s ability to turn customers into repeat buyers and prevent them from switching to a competitor. Customer retention takes a proactive approach which focuses on building loyalty and encouraging repeat purchases from customers who have already engaged with the brand.
Customer retention is different from customer acquisition or lead generation. It focuses on customers who have already signed up for a service or purchased a product from you.
Customer Retention and Customer Acquisition go hand in hand
DTC Entrepreneurs often tend to focus a lot of their energies first and only on paid customer acquisition strategies. In reality, if you don’t focus on your owned marketing efforts first, you will find your data showing rising customer acquisition costs and a very choppy net contribution margin. If you don’t play on both sides – acquisition and retention, then you will need to firefight your way into ultimately focusing on retention to save heartache and bleeding margins.
So, it’s advisable for any DTC store irrespective of size to build and invest in a retention moat before even investing in paid acquisition.
Retention marketing is an omnichannel effort.
Many marketers are grappling with changes by focusing on profitability over growth – ensuring the customers they acquire keep coming back, sign up for subscriptions, and join brands’ loyalty programs.
Many DTC entrepreneurs stop at SEO and some Conversion Rate Optimisation (CRO) efforts besides some investment in customer support and email.
However, retention marketing requires crafting of a holistic retention marketing strategy depending on the lifecycle stage and business goals of your brand. While acquisition efforts focusing on converting a visitor to a buyer, retention efforts span the entire lifecycle of lead nurturing from generating awareness to building a post-purchase experience, nurture repeat buyers and re-engage inactive customers.
According to a study published by Salesforce, the odds of turning a first-time browser into a buyer are just 5-20%, while the likelihood of turning an existing customer into a repeat buyer is 60-70%.
Learn more on 14 best takeaways for 2023 for ecommerce stores here
Here are 15 retention marketing strategies and channels to focus on that are proven to help grow your AOV, CLTV and profit margins.
1. Craft your email marketing to the match the customer journey: Email Marketing is owned marketing at its best, which is all about taking ownership of your company’s growth by taking back control of the entire customer decision journey. Email marketing generates an unmatched ROI of $36 per $1 spent.
To win, engage, inform, educate, and convert visitors to subscribers and then customers – email is a proven and essential channel to retain customers.
Here’s how you can design an effective email marketing retention campaign:
i. Segment your email lists basis customer behavior, preferences, demographics, and purchase history.
ii. Automate emails based on these segmentations in drip campaigns (e.g., a welcome series if it’s their first purchase, post-purchase emails, and abandoned cart emails).
iii. Include relevant, personalized information in the email (e.g., recommended products, reminders about products they’ve already been browsing, educational product information).
iv. Use clear and attention-grabbing subject lines to stand out in customers’ inboxes.
v. Optimize email send times and action the latest best practices to ensure a healthy deliverability.
vi. To personalize your email campaigns with Rebuy, check out our integration with Klaviyo.
Learn how to leverage email and SMS marketing to scale DTC here
2. Launch a Loyalty program: Rewarding returning customers with special perks and discounts can encourage repeat purchases and build trust and engagement with your brand. To start off with make sure you are tracking purchase frequency to be able to segment your repeat customers in order to incentivize and personalize communications with them. Customers love a good loyalty program. In fact, 74% of them are more likely to recommend a company that has a top-notch loyalty program.
To ensure a loyalty program launch is successful, following are a few things to bear in mind:
i. Make signing up easy and frictionless
ii. Offer unique pricing and special discounts to loyalty members!
iii. Offer unique limited product editions, flash sales and special early bird pricing to loyalty members.
iv. Build a community around loyalty programs.
v. Allow for flexibility in swapping points and rewards.
vi. Continuously seek feedback
3. Leverage SMS Marketing: SMS marketing is the most dynamic marketing communications and audience channel. 6 billion SMS messages are sent each day in the US, over 180 billion are sent each month, and 2.3 trillion are sent each year – CTIA.
SMS allows for a retention centric approach – it has 98% open rates, 5%-30% click rates, with 90% of texts are read in less than 3 mins. And while we know that email is still an essential channel, email and SMS work better together.
SMS works cohesively with email. Email subscribers get more value from SMS and become an educated buyer. SMS subscribers act more impulsively. They cover a wider range of customers and increase top line sales. SMS and Email Marketing are better together. They help drive more revenue, save more carts, and start more conversations. Here are some tips to make SMS marketing more effective:
i. Keep messages short and punchy!
ii. Focus on action-oriented text copy!
iii. Encourage a two-way conversation.
iv. Leverage SMS features like two step flows, pop-up forms, checkout page integration, keywords, double opt-in forms
v. Keywords on your social profiles help in introducing your brand to your SMS program.
vi. QR code introduction on packaging inviting customers to opt-in to SMS messages.
To know more about Attentive and Yotpo SMS features read more here.
Learn 6 SMS Marketing Automations to accelerate revenue for your store here
4. Leverage a referral program to extend adoption!
Referral programs incentivize your customers to share their love for your brand and products with their friends and family. Referral programs make the most of word-of-mouth recommendations, as 82% of Americans seek recommendations before making a product purchase.
Here’s how to set up a referral rewards program:
i. Decide on the incentives you plan to offer (e.g., discounts, cash rewards, gifts).
ii. Create a clear set of program terms and conditions.
Choose a referral program software like https://socialsnowball.io/ or https://www.friendbuy.com/
iii. Promote the program through your marketing channels, targeting frequent purchasers.
iv. Monitor and track how it’s going and make refinements when ROI is low on referrals.
5. Encourage customers to share reviews: Reviews not only helps build a brands credibility, they also gives brands intriguing insights to their product, usage, benefits, pros, cons and issues. Reviews help in boosting store SEO and help drive up product education resulting in increased trust.
Reviews can be further leveraged to drive down return rate by helping shoppers get precise product information from features, to fit by displaying key product attributes. According to research conducted by referral candy, referred customers are less likely to leave, also 92% of consumers trust recommendations from people they know.
In addition, reviews help drive up repeat purchase and help grow AOV. Learn more about Okendo.io and Yotpo Reviews features here.
6. Launch Surveys to Enhance Product Innovation and Plug Service Gaps:
Customer Surveys help in listening to your customer feedback and provides an opportunity to serve their needs better. Understanding customer choices help tailor and personalize communications better, blending surveys at the checkout point helps capture insights at a critical touchpoint.
Learn more about how to personalize SMS and Email Flows with Fairing here.
7. Reward Repeat Purchases with Subscriptions: Brands offering subscriptions grew 26% faster and were 14% more profitable than those that didn’t – so including a subscription strategy for your brand is a no brainer. Tie your subscription membership program to loyalty!
Introduce your customers to your product portfolio, add samples and share new high value bundles that leverage personalization to match buyer intent.
Launch your subscription program with surprise and delight programs. See how vitamin brand OLLY increased subscription revenue by 63%.
Learn more on what leading DTC subscription brands have in common
8. Personalize the Post Purchase Experience: A personalized post-purchase experience can increase sales, boost customer loyalty, and, as a result, improve retention. According to a Segment report, 62% of companies cite personalization as a reason for an increase in customer retention.
i. Share time-limited offers they might be interested in that they can add to their recent order within a certain time frame.
ii. Offer a discount or coupon code as a thank you gesture for future purchase.
iii. Display related or complementary products that a customer might not have realized you offer. Launch up-sells and cross-sells right after checkout.
iv. Display the same related product recommendations on product pages, the home page, and via marketing materials the next time they come to your store.
Use Rebuy Smart Cart to personalize the cart and checkout experience for you!
Learn more on how to build email lists for ecommerce stores here
9. Make Delivery, Returns and Refunds a Breeze: No matter what product or service you are selling, creating a positive customer experience is key to long term success and gaining repeat customers. Customers continue to expect faster response times. One HubSpot survey showed that 90% of customers rate an “immediate” response as important or very important when they have a customer service question. Faster responses that lead to a quicker resolution and can result in increased revenue.
Investment in a customer support software such as Gorgias, is key to automating customer service at scale and improving first response times. Have a clear and transparent delivery, return, and refund process that’s easy to find from the second a customer decides to purchase your items until they receive them is another important aspect to drive a high-quality customer experience.
So, how can one make it easy for customers to manage delivery, returns and refunds.
i. Using real time order tracking across channels like email, SMS, and push notifications.
ii. Incorporating visuals that make it easy to absorb the details of their order for key steps in the delivery process such as order received, shipped, out for delivery and delivered.
iii. Automate returns by leveraging software such as Loop returns. A returns software helps in saving time and money, retain more revenue, drive customer loyalty, offer sustainable returns and helps drive customer loyalty.
iv. Clearly communicate product specifications and details to reduce returns and increased customer dissonance detailing product shots, use cases, ingredients, weight, height, specs etc with video and image assets as well on the product detail pages.
v. Add an FAQ section with specific responses to common queries and concerns that result in returns.
vi. Automate customer support via tools like Gorgias to manage and automate tickets, integrate live chat, and leverage scripts and email templates i.e. offer multi-channel customer support options.
vii. Create a system to categorize and prioritize and segment tickets!
viii. Optimize for exchanges over refunds: Anywhere upto 40% of purchases, may end in a return, so its essential to put a great post purchase experience in place. Provide an incentive for customers choosing to return to instead offer an exchange.
Learn 2024 ecommerce trends and thoughts for DTC owners here
10. Engage Your Customers on social media: According to Research and Markets report, The global market for Social Commerce estimated at US$992.4 Billion in the year 2022, is projected to reach a revised size of US$8.5 Trillion by 2030, growing at a CAGR of 30.7% over the analysis period 2022-2030. With the right kind of customer engagement and social commerce strategy, you can also improve engagement, conversion, increase overall brand loyalty and drive new customer traffic to your store.
Here are some ways to engage with your customers on social media:
i. Figure out on the best popular platforms your customer base spends time most on
ii. Work with influencers on platforms like Instagram, TikTok or YouTube
iii. Sponsor micro-influencers on YouTube and provide a discount code or referral link
iv. Share user generated content (UGC) content about new products and ask for feedback and opinions!
v. Host a giveaway contest and ask people to tag friends and engage with the post in order to enter!
vi. Try your hand at live commerce with an internal team member or partner with an influencer.
vii. Allocate a budget for social media ads and engage with any comments or questions people post.
11. Deliver personalized offers to your customers!
Focus on customer lifecycles and improving lifetime value more than channels and use predictive analytics to your advantage.
“Offer customers a survey with an incentive and/or personalized second purchase recommendations early in the customer’s journey to prevent customer churn. Layer Klaviyo’s predictive analytics features and our aggregate CDP data to reach people at the optimal time.
12. Invest in a list growth strategy.
If you’re not growing your list, it’s shrinking.
Over time, a portion of customers will inevitably churn. To compensate, your list needs to keep expanding long-term. Once you have customers on your list, provide them with the right content that helps them with their next purchase decision.
Focusing on list growth will help your store attract not just more customers, but the right customers – those who have high intent and are ready to purchase your products.
Smarte Digital Inc. is an ecommerce retention marketing partner for modern DTC brands. We offer exclusive pricing offers for our ecommerce strategy consulting services and our lifecycle marketing services such as email marketing, SMS marketing services for Q1 2024.
We are also offering a free martech stack audit for Q1 2024. To identify gaps in your tech stack and optimize your martech stack, lets chat. Strengthen your foundational retention strategy now for growth, book a free 30 min discovery call with us at https://smartedigital/contact-us.
