6 Proven Customer Retention Strategies for Your eCommerce Brand

Getting new customers through splashy marketing and ad campaigns is great.

But the real litmus test of success for your eCommerce business is how many customers you’re able to retain consistently.

Your customer retention rate tells you whether people actually love your products and come back for more. It’s also a clear indicator of the quality of your post-purchase experience.

The more shoppers you’re able to retain, the bigger community of loyal brand advocates you can build.

But if you’re struggling to ramp up those retention numbers, bookmark this guide right away! We’ve curated six awesome customer retention tactics for eCommerce business owners like you with actionable tips and examples.

What is customer retention?

Customer retention measures the percentage of customers you’re able to retain in a given period. It calculates how many people continue to shop from your brand after their first purchase. It’s a widely used metric to assess business health since retention rate can reveal whether customers enjoy shopping from you or not.

Measuring customer retention is critical because it can give you a pulse of your buyers. If your retention rate is falling or stagnant, it’s clear that your customer experience has gaps and points of friction.

How to calculate and analyze your customer retention rate (CRR)?

You can calculate your average customer retention rate using three data points:

• Number of new customers acquired in a given period
• Number of customers at the start of this period
• Number of customers at the end of this period

Now, apply these data points in this formula:

Customers at the end of this period — Customers acquired in a given period / Customers at the start of this period x 100

Sounds complicated? Let’s understand this with a quick example.

Imagine you’re tracking your retention rate for this quarter. You started the quarter with 200 customers and gained 50 new customers. You ended the quarter with 230 customers.

By applying this formula, you’ll get a retention rate of 90%, which means 90% of the customers continued to shop from you throughout this quarter.

6 proven tactics to drive customer retention for eCommerce brands

Now that we’re clear on all the basics about customer retention let’s get down to business. I’ll break down six tried-and-tested customer retention strategies to wow your shoppers.

1. Build a community around brand values

Gone are the days when you could run a flashy ad campaign, get hundreds of orders, and call it a day. Today’s savvy shoppers don’t fall for gimmicky or promotional marketing campaigns. Instead, they buy from brands they trust.

And the best way to build trust among existing and new buyers is by building a community for your brand.

The idea is to bring together people who share the same values as you and resonate with your brand identity. Then, turn them into long-term customers through meaningful community-driven engagement.

Here are a few ways to build an awesome community for your audience:

• Host value-packed events: Give shoppers a platform to discuss topics of interest and interact with like-minded folks—whether it’s through an Instagram Live session or an in-person meet-and-greet show. Here’s a great example of Cosmix hosting a masterclass on gut health—a topic of interest for their audience.

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• Create brand ambassadors: Turn long-term customers into the face of your brand with a brand ambassador program. This would be a great way to encourage customer loyalty and create a more appealing image for your brand.

• Leverage user-generated content: UGC can open several opportunities for building a brand community. You can use UGC videos to showcase your customers’ first hand experiences and stories, which will create more trust for your brand than a-list influencers.

• Build a community platform: If you can invest more effort into this campaign, then it’s a great idea to launch your community using platforms like Slack, Circle, WhatsApp, and similar. Use this community to have meaningful discussions, share product updates, and make exclusive announcements.

2. Ask your customers what’s working

If you ask me which brands I consistently shop from, I’d say it’s always the ones who make me feel seen and heard. The best brands listen closely to their shoppers and incorporate feedback to improve their customer experience.

After all, collecting + implementing customer insights to improve your brand can make them feel more invested in your growth.

Here’s a cool example of a customer feedback form by The Souled Store. Even though it’s an automated email I received after placing an order, it’s written by a human and emphasizes the value of my feedback. And the unique rating scale definitely gets a bonus point.

But you don’t have to restrict yourself to customer feedback surveys via email. Here are a few other ways to ask customers what’s working for them:

• Conduct polls and quizzes on social media channels
• Launch product review contests to invite first-hand user reviews
• Add a live chat option on your website to get shoppers’ thoughts
• Create SMS and calling campaigns to speak directly to your shoppers
• Host virtual focus groups with a select few customers to get different opinions

The key to improving your customer experience is listening intently to what they have to say about your brand.

3. Be convenient with returns and refunds

What’s the most frustrating part of shopping from eCommerce brands? The complex return and refund process.

So many brands don’t have a transparent returns policy, which creates unnecessary friction for buyers. Some brands also make it too challenging for customers to return a product. This can become the biggest barrier for buyers to make another purchase.

You need a quick and convenient return policy to gain shoppers’ trust and build a competitive edge. It’ll ultimately translate into repeat buyers and greater retention.

Follow this checklist to design a seamless return and refund policy:

• Make your policy easy to find and maintain complete transparency to set the right expectations
• Offer free return shipping instead of asking customers to ship the products on their own
• Provide a return window of 15-30 days for customers to make a confident decision
• Create a quick return review process and provide instant refunds to avoid delays
• Give buyers real-time updates on the return process

Lastly, you should ask customers why they returned a particular product. This feedback is critical to improving your customer experience and minimizing future returns.

4. Lead your support with empathy

Empathetic customer support is an essential building block for modern eCommerce businesses. If you want to encourage repeat purchases and win over your buyers, you have to interact with them meaningfully and resolve issues quickly.

Here are a few key aspects of building an empathetic support team:

• Listen actively: Train your team to listen to a customer intently without interrupting. Even if they’re on a long rant about a grievance, you should let them speak it all out.

• Validate feelings: Your support executives should respond by first acknowledging customers’ feelings and use phrases like “I can see why that would be frustrating”.

• Personalize responses: Don’t send templated or AI-generated responses. Instead, you have to sound human and leverage personalization to make a good impression.

• Follow up with value: Once you’ve offered a resolution, follow up with the concerned customer in 24-48 hours to assess if the problem is resolved.

I found this great example of an empathetic conversation between a buyer and a support rep. You should adopt this kind of tone and language to communicate well.

5. Become indispensable with a loyalty program

A customer loyalty program is an excellent channel to drive retention. Create a well-thought-out program with different tiers and rewards to incentivize your customers to shop again and again (and again).

Go beyond the traditional points system to make your rewards truly desirable. You should give them something of real value instead of an easily forgettable reward.

You can also personalize these rewards by giving customers a choice to select what kind of rewards they prefer. Or analyze their purchase history to offer the most relevant incentives based on their preferences.

Besides, offering tiered membership levels is a great way to gamify the whole experience. This will encourage customers to upgrade to the next level and enjoy more benefits. Nordstrom’s The Nordy Club is a great example of an eCommerce loyalty program with tier-based rewards and incentives.

6. Leverage videos to deliver a standout buyer experience

Video content has the power to make or break your customer experience. Done right, video marketing can encourage more shoppers to buy from your brand and come back for more.

Check out these types of videos you can create for your buyers:

• 360-degree product videos: Give buyers a complete look at your products with 360-degree videos. You can bring your product to life and create an immersive experience for shoppers with such product videos. Better yet, convert them into shoppable videos and create a one-click checkout experience, like this video by Celebration Box.

• How-to tutorials: Create explainer videos on how to use your products and share best practices for customers to get the best value. You can also upload these videos on your website or a YouTube channel, like Osprey in this example.

• UGC videos: Build more credibility for your brand by posting user-generated videos across different channels. You can also embed them on your website to make a solid first impression on interested shoppers. Here’s how Dr. Squatch uses UGC videos on their website to maximize conversion rates.

Ramp up your customer retention rates

That’s a wrap on our best tips and tactics to increase customer retention. Before building your retention game plan, set a budget to inform your decision-making. You can start with more cost-effective tactics like delivering empathetic support and creating a customer-driven community.

Then, take the next step and make your customer experience more exciting with a loyalty program, easy returns, regular sync-ins, and more such methods.

Check out our collection of real-life success stories from industry-leading eCommerce brands to learn how they’re leveraging videos to create customer delight.