As more retailers moved online it became a marketing game. Who could get the most traffic to their store to make a purchase. Search Engine Marketing became the standard and for the most part still is today. The problem in today’s ecommerce atmosphere is that there is much more competition and ads are getting more expensive and less effective, what is a store to do?
It is much more expensive to get a potential shopper to your site than ever before, and with all the competition out there you need devoted conversion campaigns to get them to stay and shop. Now that acquisition costs are so high you need a shopper to come back and make a second, third, and fourth purchase to make your investment worthwhile. Focusing marketing efforts on getting a current customer to shop again is know as “Retention Marketing”, and here is how you do it.
What is a Retention Marketing Strategy?
Retention marketing is any effort your store makes to get more one time customers back to purchase again, and to boost the profitability of each customer. Acquisition is like your store’s offense and retention is its defense.
A repeat purchase is worth much more to your store than getting a new customer to shop once. This is why I am surprised by the current average marketing breakdown of an ecommerce store.
The majority of stores are not adequately devoting resources to retention marketing campaigns despite the overwhelming evidence that a repeat customer is more profitable. In this post I will be going over how to structure and execute an effective retention marketing campaign.
The Stages of a Retention Marketing Strategy
A retention marketing campaign can be broken into four key stages. Each stage has specific tactics and tools which are effective. Below I will define each stage, explain why it is important, and offer some advice on how to execute the strategy.
Stage 1: Know Your Customer
The first stage of getting anyone to come back and shop with you again is knowing as much about them as possible. Even just an email address will go a long way in future retention efforts. This stage focuses on removing guest checkouts and encouraging customers to give you their information.
When you get a customer to register for an account you get there email, which is one of the most profitable things you can get. Once you have an email you can reach out to them with offers, promotions, and more. But getting a customer's email is easier said than done. They know you will be emailing them and most don’t want that.
Tactics to know your customer:
Incentives - This is a sales tactic that is as old as time itself, but it is effective. If you want someone to do something you need to give them something in return. In ecommerce this is very easy to do and you see most large companies utilizing it.
You can use a percentage off, a coupon, or rewards points to get your shoppers to register for an account or a newsletter. Flash Tattoo actually does both! They give a percentage off for subscribing to the newsletter as seen below.
They also utilize a rewards program to encourage customers to also register for an account rather than checking out as a guest. Rewarding account registrations can be done for free with loyalty apps like Sweet Tooth.
Offering a monetary incentive is not the only way to get a shopper to give you their email address. You can also get them to give it to voluntarily.
Live Chat - A customer will also be willing to give you their email for value even if it isn't money. Using live chat software on your store allows you to trade your time and knowledge for a customer's email. This is a great retention tool because it gets you there email and allows you to answer questions and deal with complaints. A solid customer experience is the foundation of customer loyalty. Here is an example using the Zopim app.
Stage 2: Encourage a Second Purchase
Once you know who your customers are the next stage is to get them back for a repeat purchase. This is much easier if you used some form of email capture as recommended in the stage above. This stage is focused on getting people who have made a purchase in the past to come back again for the second purchase at your store. These customers are know as returning customers.
This is a crucial stage in your retention marketing campaign, because encouraging a customer to come back is tough. But, if you can get them to make a second purchase they are 27% more likely to come back again than they were before. Not a bad boost in conversion!
Tactics to encourage a second purchase:
Targeted Email - Time to put those emails to use! now that you have a customer’s email you should send them an email offer to come back and purchase from you again. The trick here is to make sure you don’t spam your customers. Email marketing apps like Klaviyo make it easier for you to segment and send relevant email offers that your customers will actually enjoy.
Give Points - If you use a rewards program you can now use those points you gave a shopper to encourage them to come back. If a shopper has points they now have a switching barrier if they choose a competitor for their next purchase. We have a really hard time giving up this value to choose another store, this makes a returning customer much more likely when they have points.
Ship an Offer - An alternative to sending an email offer for the next purchase is to ship an offer for their next purchase with the first one.
These inserts provide a ton benefits, but the best is that it is not easy to ignore. It is easy for an email offer to become buried in your customer’s inbox, but when it is shipped with their purchase it is guaranteed to be seen. You can also position the offer as a thank you for their business which becomes even more effective!
Stage 3: Turn Them Into Repeat Buyers
Once a customer has come back to make a second purchase you need to work on turning them into repeat customers. Repeat customers are those who have come back to make a third purchase or more from your store. These repeat customers have a 60% to 70% chance of converting according to Marketing Metrics, that is a huge increase over your usual conversion rate!
This is the stage where your previous efforts really start to pay off! You have got a shopper to your site, got them back for a second purchase, and now they are hooked (well sort of). Once you have a repeat customer you need to provide them with an experience they don’t get anywhere else. This will ensure that they come back again and again.
Tactics to encourage repeat buyers:
Amazing Content - I believe this is one of the biggest drivers of ecommerce success today. Today’s shoppers are not just looking for the cheapest price or the right product they are looking for a total experience which is provided through content like a blog, a youtube channel, or instagram account.
A great quote I have heard is that your brand is the amusement park and your products are the souvenirs your customers take home. This means you need to connect with your customers! If you have a fan of makeup in your life chances are they follow some youtube personalities. These personalities almost always have their own brand of products that people come back for again and again.
em cosmetics is a great example of using content marketing to encourage profitable repeat customers.
Gamification - This is another fantastic way to create a customer experience that gets customers coming back again and again, Like I said before if you want to have repeat customers you need to give them a reason to come back to your site often.
When you introduce game elements to your site like additional benefits when you spend more, share referrals, or visit frequently. Gamification is often used in conjunction with a rewards program to boost its effectiveness.
Stage 4: Create Customer Loyalty
This is the holy grail of a retention marketing campaign, you want your customers to get to a point where they not only buy from you frequently but also are an advocate of your brand and store. These customers are not only profitable, but often become your store’s best advertising.
This stage takes all of your repeat customers and attempt to convert them into advocates that promote your store to friends, family, and even strangers. The goal here is to get these customers to idolize your store and brand. Think Apple and Disney fans/customers!
Tactics to create customer loyalty:
Encourage Sharing - Many of your customers are willing to share your store or send a referral, but few actually do. They often need a reminder and a reason to do these actions. This goes back to the incentives I spoke of earlier. This time you are incenting them to do something public, which is often a little more tricky. But if they are repeat customers, they should have no problem performing the task for you.
The best incentives at this stage are reward points as part of a loyalty program. If you haven’t started one earlier in your retention marketing campaign this is the time to start. You can reward your loyal customers points for being social and referring friends. Like in this example from Bottle Keeper.
Personalization - Think about why you love your favorite restaurant or coffee shop. I bet it is because they know you on some sort of personal level. They might know your name, your order, or a little about your family or career. Customers love feeling like they are valued on a personal level and ecommerce is no different.
The amount you invest in personalization tools for your retention marketing can range from total custom integrations to simply using a customer's name in all communication. Treat your online customers as if they are standing directly in front of you. This way they are getting an experience that matches what they are used to from their favorite offline shops.
A Total Retention Strategy
I know that a retention marketing strategy is a new concept to most people and I want to make starting a campaign as easy as possible. Below are some more great resources you can read on creating a retention marketing strategy of your own. You can also reach out the Growth Spark team (I have seen their work, they know retention marketing)!
About the author:
Alex McEachern is a Customer Loyalty Specialist and the primary author on the Sweet Tooth Blog. He writes frequently on ecommerce, retention, and customer loyalty.