Are ecommerce customer retention strategies improving?

New stats suggest that retailers are improving their customer retention rates, so is this the result of a focus on the customer experience

IMRG stats found that ‘the active customer retention rate’ reached a record high of 36.4% for May to July 2016 (Q2), 5% higher than the same period in 2015.

The report also found that the average price per item sold reached its lowest in three years in Q2, which suggests plenty of discounting, a result of Amazon’s Prime Day perhaps.

The increased retention rates should be heartening for retailers though, and suggests that many are pursuing a more effective long-term strategy. There has been a tendency to focus on acquisition at the expense of retention, but the former is generally more cost-effective.

For example, here’s a selection on stats on retention:

  • The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20% (Marketing Metrics)
  • 66% of consumers say features, design and quality of product or service are the leading factor that determined brand loyalty (Support.com).
  • The top three reasons consumers switch brands: cheaper pricing (31%), rude staff (18%) and too many mistakes (16%) (Verint).
  • 71% of consumers have ended their relationship with a company due to poor customer service. (KISSMetrics)

What influences customer retention rates?

There are a number of reasons, many of which centre around the all round customer experience, from on-site usability and ease of buying, to delivery performance and customer service.

Here are some of the key factors:

  • Price. If your prices are competitive and customers know this, you’re likely to be their first port of call when looking to make a purchase. Amazon being the obvious example.
  • On-site performance. Good UX matters. If your site makes it easy for customers to find items, the information they need, and to complete checkout, then they’ll be more likely to return.superdrug guest checkout
  • Delivery. If you deliver on-time, as agreed, then you will earn the trust of your customers. Conversely, few things deter shoppers such as late delivery and related problems.
  • Saved payment details. If customers only have to enter an email and password to buy, then much of the hassle is removed from the process, especially for mobile shoppers. Some, like Domino’s, take it even further with one-click or even no-click ordering.dominos
  • Great customer service. Even if products have to be returned, then great after-sales service can leave a positive impression on customers. Bad service infuriates customers, and word gets around.
  • Loyalty schemes. Another way to increase customer loyalty is to introduce schemes to reward and encourage repeat purchases. The Container Store’s loyalty program is one such example.

The IMRG stats are encouraging. We’ll see how the trend continues when the next update is released, but a focus on retention through improving customer experience is the way forward.

For more information on ecommerce, see our Ecommerce Checkout Best Practice Guide. For more reports, including guides on mobile commerce, customer experience, and social customer service, head to ClickZ Intelligence

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