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Shopify 101: Retention Strategies to Maximize Customer Lifetime Value

Growth Spark

This is the fifth article in our six-part series on the E-Commerce Customer Lifecycle (ECL). It documents the stages of your online shoppers’ interaction with your brand, and provides a reliable, measurable, and predictable process to take your store from inception to success! Read the first four posts here: Intro to the E-Commerce Customer Lifecycle; How to Drive Traffic to Your Online Store;Increase Conversions; Fulfilling Orders and Mastering Shipping.

(Photo by Anthony Ginsbrook on Unsplash)

We all know the statistics about how much more difficult and expensive it is to acquire a new customer than to keep an existing one. Once you’ve gotten someone’s attention, convinced them to explore your site and products, presented something they’re interested in enough to place an order, and delivered it to their door, you’ve done the hardest work there is when it comes to e-commerce. You have a new customer!

We hate to break it to you, but 80 percent of buyers are one-and-done. Think about it: most e-commerce companies expect 20 percent of customers to drive 80 percent of revenues. Those 20 percent are your repeat buyers. The rest? Well, They purchase from you once, and you don’t ever hear from them again.

That situation is leaving an awful lot of potential revenue and growth on the table.

The most important aspect of e-commerce customer retention is to maximize customer lifetime value (CLV). Customer lifetime value is the predicted total value of an individual customer over the duration of your relationship with them. Essentially, how much money can you make from that one customer relationship?

There are two primary ways to affect CLV:

  1. Increase CLV for individual customers in a one-to-one relationship, and
  2. Turn individual customers into brand evangelists for your company (a one-to-many relationship).

Both of these strategies have the potential to significantly impact customer lifetime value. Let’s take a look at how.

How to Increase CLV at the Individual Level

You have a customer. They found your brand, made a purchase, and received a product. How can you increase the likelihood that they’ll return to buy again? (And ideally, sooner rather than later, right?)

Let’s take a look at all of the the possible touchpoints that could influence a shopper returning to make a second purchase.

RETURNS MANAGEMENT

They made a first purchase and, ugh, for whatever reason they don’t actually want to keep it. Maybe it’s the wrong size, maybe it didn’t look like they thought it would, maybe they spent too much in Vegas last weekend and need to save a little cash. Who knows. What I do know is the way you process their return could very well be the difference between that customer returning to buy again, and not.

Before we dig too deep into returns management, I should mention that this aspect of e-commerce is also often considered part of fulfillment (Which we talk about in depth in the last post in this series, “Shopify 101: Fulfilling Orders and Mastering Shipping”).

The important piece here is: Make it easy and painless. The big picture is that you want them to try again. You want to communicate to them that: “Hey, no biggie. We’ll take that off your hands. We’d love for you to find something that you’ll truly enjoy and want to keep forever and ever.”

By integrating an app like Returnly into your Shopify site, you can provide self-service returns, ship exchanges instantly, provide tracking and shopper notifications, and other customer-friendly returns support that will hopefully give them a reason to come back and try again.

On a Returnly blog post titled, “The Surprising ROI of Online Returns,” the company noted a study from The Journal of Marketing Research that found: “...retailers who offered a low-risk returns experience saw 45% higher profits per customer over a six-month window and 29% higher profits per customer over a three-year span. Lowering the customer's perceived risk of current and future purchases made significant impacts on customer value in both the short-and long-term.”

CUSTOMER SUPPORT

71% of customers have stopped buying from brands only because of their poor customer service (ouch), and 86% of customers are willing to pay up to 25% more for products and services just to have a better customer experience.

Wow. Not only does that give you a huge edge by providing great customer service, it also presents a major opportunity for increasing your CLV.

Here are a few ways to deliver a great customer service experience:

  • Set your customers’ expectations, and then do better. Be up front and detailed about what you can deliver in terms of delivery speeds, product descriptions, response times, etc. - but always be conservative in what you promise. Then come through faster, better, more over-the-top.
    • Four words for your “dream” customer service team: fast, friendly, competent, proactive.
    • Offer multi-channel support: live chat (like Siren Marine offers on their homepage, below), email, phone, social media, text, etc.
    • Build a consistent, responsive customer support help desk (on top of Shopify’s native functionality) by integrating an app like Gorgias.

    Live chat for e-commerce customer service

    Once you’re confident that you’re addressing your customers concerns, questions, and needs like a pro, it’s time to crank up the power on your marketing automation engine.

    MARKETING AUTOMATION

    Just like the many channels you need to cover to deliver comprehensive customer service, your marketing automation program can take advantage of the same multi-channel approach. While the exact channel mix that’s right for your store will depend on a range of variables, let’s touch on five of the more common, highly powerful options:

    Email marketing ROI

    Chart from eMarketer

    • Email Marketing: Email has a median ROI of 122%; over four-times higher than other marketing formats including social media, direct mail, and paid search. Your email marketing program (check out Klaviyo) can focus on a welcome series, a cart abandonment series, a reactivation series, and possibly a fun personalized series like customer birthdays.
    • SMS / Text: Send automated text messages to customers phones when their order is confirmed or their package is being shipped. Or send a welcome message for a new subscriber, or a birthday text (with special gift) to subscribers with birthdays. (Our fave app for SMS integration is Voxie.)
    • Facebook Messenger: If you’re using Facebook as a sales channel, it might be worth meeting your customers where they are. Use a chatbot app like Octane to send abandoned cart follow-ups, promotional messages, shipping updates, order receipts, etc.
    • Customer Loyalty: Encourage customer loyalty with rewards programs, a VIP program or other automated “insider” messaging. Use an app integration like Smile-io to send loyalty members exclusive discounts and offers, further building on their relationship with your business.
    • Referral Marketing: Encourage your happy customers to do your marketing on your behalf. Integrate an app like Friendbuy into your Shopify store to make it super easy for customers to refer your store or specific products to their friends.

    With the tools in your back pocket to turn a one-and-done shopper into a loyal customer, you might as well take it one step further. Turn that loyal customer into a brand evangelist.

    The loyalty and referral programs mentioned above are the beginning of this process, but there are other ways to establish a close-knit, reciprocal relationship with your BFF customers.

    Turning Customers Into Brand Evangelists

    A customer makes a purchase; once, twice, or ten times. Most shoppers are customers. But every once in a while, a customer will so enthusiastically love your brand or a specific product that they’ll happily shout it from the top of their social networks.

    E-commerce Brand evangelist Twitter

    That is a brand evangelist. A customer who loves your brand or product, and is motivated and excited to share their experience with their network.

    The second big way to increase your CLV is to turn your customers into brand evangelists. Of course, it’s not as simple or straightforward as we’d like it to be, but creating brand evangelists usually comes down to two guiding principles:

    Talk and listen.

    It’s how we build any substantial relationship: by getting to know each other. Welcome feedback from your customers, respond to their problems and criticisms, and take action on their positive feedback. Get to know what your customers love about your brand.

    The power of brand evangelists for your brand is in user-generated content. This includes:

    • Social shares (check out the AddThis app)
    • Customer testimonials and stories
    • Product reviews (we love the functionality in Okendo)
    • Social hashtag campaigns (Juicer is a great app for this)

    E-commerce retention strategy

    When your customers share information about your brand on social media, post testimonials and reviews, and use your company’s hashtags, they attach authenticity and trust to these messages - more so than any marketing message could create create. They effortlessly establish a level of trust between their network and your brand.

    This authenticity and trust are two of the biggest drivers of increased customer lifetime value.

    A Retention Strategy That Keeps ‘Em Coming Back For More

    Customer retention strategies are focused on bringing customers back, again and again, and maximizing the profitability of each existing customer.

    You work so hard to acquire a new customer - now is the time to make it worth your while by building a closer relationship with your customers, understanding what they love about your brand, and giving them more of that.

    Successful retention strategies are great for your brand and your customers: you’re working hard to give them more of what they want, and in return they continue to shop with you and help you grow your reach. #WinWin

    Read more about Retention:

    Other posts from our “Shopify 101” series:











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