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Customer Retention: How To Keep Customers Coming Back Repeatedly

Author Kesar RanaKesar Rana

10 min read
Better Business

Every business likes new customers, especially when the customer uses their services again and again. Existing customers help in creating a solid foundation of your business that provides a steady revenue stream that costs less than acquiring new customers.

Customer Retention: How To Keep Customers Coming Back Repeatedly

Every e-commerce business likes new customers. However, it’s even better when the same customer returns.

Existing customers help in creating a solid foundation of your business that provides a steady revenue stream that costs less than the costs of acquiring new customers. Research shows that return customers account for about 15% of all transactions and spend an average of three times as much as new customers.

Instead of retaining new customers, some companies focus on acquiring new ones. However, not taking the necessary steps to retain new customers can lead to revenue loss and a decline in growth which you do not want.

By the way, as your e-commerce business grows, you might overlook the boring but necessary work of keeping your books in order. That’s when we can help. Our e-commerce accountants, who know how e-commerce business works, can help you with sorting that out. Talk to us to know more, otherwise, do read on.

What Is Customer Retention?

Customer retention is a skill of retaining customers. The strategy of retaining customers is different for every industry and also differs from company to company. Still, the important part is to provide a great customer experience to keep your customers coming back. You can start by giving a positive buyer journey through check out and beyond that will help in improving the loyalty and affinity for your brand.  So, how can you calculate customer retention?

How To Calculate Customer Retention?

You can calculate customer retention by:

  • Choosing a period like a month or year.
  • Subtract the number of new customers (N) acquired in that time frame from the total number of customers (E) remaining.
  • Divide this number by the number of customers at the start of the period (S).
  • To get a percentage, multiply it by 100.


For example, let’s say you want to calculate the retention rate for a particular month. You see that you had 105 customers at the start of the month (S) and that you acquired an additional ten customers (N) during that month. At the end of the month, you lost 30 customers, leaving you with 75 existing ones (E).  Following our formula, we would subtract 10 from 75 for a total of 65 customers. Divide this number by 105 to give you a retention rate of .62. (Multiplying by 100 will provide you with a percentage - in this case, 62%).  

In other words, the higher your customer retention rate, the better your position in the marketplace.

Why Is Customer Retention Important?

Apart from the fact that acquiring new customers is more expensive than keeping existing customers, other reasons make customer retention important.

Retaining customers can use your services 50% more than a new customer. They also tend to spend 33% more than new customers and help in reducing your marketing costs. So you see, retaining existing customers is more profitable than just acquiring new customers.

Retained customers are more likely to send referrals your way. They tell their friends and family, thus contributing to the word of mouth advertising. It has been seen that word-of-mouth advertising drives five times more sales than paid advertising.

This results in more happy customers who drive more sales your way, thus saving your money by decreasing the advertising costs.

Benefits Of Focusing On Building Customer Retention

Let’s see why focusing on customer retention is beneficial for your business.

  1. Customer Retention Is Cheaper Than Customer Acquisition

As mentioned earlier, focusing on existing customers is less costly than acquiring new customers.

Acquiring new customers always takes lots of time, money, and effort. You’ll have to create strategies, target your primary audience, publish ads and promote your brand endlessly. It doesn’t need this much effort regarding existing customers as they already know about your brand and what it does.

To acquire new customers, you’ll have to spend five times more than to keep the existing customers. Also, there’s only a 5-20% chance of making a sale with new customers. The percentage increases to about 60-70 when it comes to selling products to existing customers.  This means that by focusing on existing customers, you can generate revenue and grow your business.

  1. Valuable, Genuine Feedback

By purchasing a product from your company, new customers don’t send any specific message about your products. However, existing customers send a clear message through their purchase behaviours. The products they buy regularly can show quality and popularity while items that are only purchased can showcase some problems. Also, repeat customers give you their feedback and suggestions as they show genuine interest in your store and products.

  1. Increased Word-of-mouth Advertising

Word of mouth advertising is a popular form of promotion that never fades away. Since times have changed, online reviews are an important part of the purchasing process. Many customers focus on reviews of the brand before making any purchase. That’s why review sites like Yelp! and Google’s review platform play an important role in the buying decision.

If they are happy with your products, existing customers will leave a positive review as compared to new customers. These positive reviews will help in acquiring new customers in return.

8 Customer Retention Strategies For Online Businesses

Around 67% of customers have said that they support small and local businesses. But in today’s marketplace, how can you set yourself apart from other famous e-commerce stores?

This can be solved by creating a loyal local customer base that will help you establish a strong business. Here are some ways that can help you to develop strong customer retention strategies to grow your business. Once you've already gotten some kind of CRM software for your business.

  1. Create A Customer Loyalty And Referral Program

With so much competition around, you will have to prompt your customers to keep using your services repeatedly. This can be done by creating a:

Loyalty Program

Developing a loyalty program can encourage customers to use your services in the future. Usually, loyalty programs issue points to customers for every purchase that they make. These points can be exchanged for free samples, products or discounts. As loyalty programs are based on how much your customers spend with your business, they drive up the average order value.

Referral Program

A referral program awards customers for sending more customers your way. According to GWI, "41% of internet users mention that rewards are one of the top things that motivate them to promote their favourite brand online."

The Shopify App Store has various types of referral program apps that encourage customers to refer people through social media via a personalised link, text, email and more.

People who like your brand refer your services to their friends and family, and in return, they get discounts or other rewards; it's usually a win-win situation for both; you get to boost sales and increase your customer base.

  1. Stand Up For Causes

Many people like to use services for those companies that share their values and stand for any cause.

According to GWI, "46% of internet users globally want brands to be eco-friendly, 44% want brands to be socially responsible, and 28% want brands to support charities."

For example, if you want to support environmental causes, you can use eco-friendly products promoting that you are actively trying to reduce your company's carbon footprints. Or you can donate a portion of your profits to organisations that clean up the environment. You can also share some of your profits with non-profits that fight for hunger.

  1. Continue Building Relationships After The Sale

Show your customers that you care about them by communicating with them regularly. Here are some ways to develop relationships with your customers.

Use Push Notifications

Your real relationship with your customers begins after checkout. You can start creating a funnel to a better post-purchase experience that can help with your repeat sales. Your shop app notification should deliver order status and delivery tracking updates to your customer's phone and inform them about every touchpoint after checkout.

Aspired by push notification, customers can find recommendations from your store every time they use your app or check out your newsletter. This means that you are helping them to decide on your next purchase even before their last order has arrived.

Send Post-purchase Emails

Make the best use of email marketing. This means that you can keep the conversation going after visiting your website or making a purchase. Email signature marketing is also a great way to provide your customers with valuable content and get them into your loyalty funnel.

According to GWI, "sharing helpful information is one of the top motivations for brand advocacy—globally, 32% of internet users reported they are more likely to promote their favourite brand online when something is relevant to their own interests."

You can send out informative newsletters to your subscribers. It's a great way to show-tell about different products they might like based on their purchase behaviour.

  1. Give your customers a seamless online to offline shopping

By providing different choices to shop and buy across various channels, including in-store and online, you can provide an omnichannel experience which many people like.

Here are some ways on putting a great omnichannel channel experience for your customers:

Offer (BOPIS) - Buy Online, Pick Up In-Store

BOPIS is also known as click and collect or curbside pickup. During the pandemic, it has gained a lot of traction. Now, customers can buy online and go to pick up a delivery. This saves their time, can quickly return items, and avoid long delivery times.

Sell your stuff on social media

Many customers use social media to find out more information about a business or brand. This also prompts them to do social shopping, allowing them to make purchases directly through social media. Commonly, popular social media platforms like Facebook, Tik Tok, and Instagram allow companies to sell directly through their platforms. "GWI research shows that 25% of Instagram users, 22% of Facebook users, and 22% of TikTok users have clicked on a sponsored or promoted post in the last month."

Let Customers Buy In-store, And Ship To A Home

About 28% of buyers said that next-day delivery would increase the chances of buying a product online. Then, why don't you use the same ideas for your in-store order fulfilment strategy?

Offering local delivery to your customers is a good solution if your company has a (virtual) showroom or offers customisable products. This gives your customers an easy way to purchase what they want which isn't available in your area.

  1. Streamline Customer Service Across All Channels

About 16 hours a day is spent making online purchases by the average US adult. The data have increased slightly since the pandemic of about 12:24 hours which is still high. That being said, according to Hiver's research, 66% percent think a company's customer service should be more empathetic and responsive due to the impact of pandemic.

As people are spending more time online, their expectations from the business have also increased. This also included a regular customer support experience across all platforms.

Customer success is about forming a long-lasting relationship with your customers. This means delivering steady customer service on all channels like phone, email, live chat, social media, etc. You can use a monthly customer service quality assurance checklist to ensure you are taking the proper actions to ensure customer loyalty through customer service.

Suppose a customer leaves a comment on one of your social media posts asking for more information about your products. In that case, you can respond directly in the comment section or send them a direct message to solve their queries. You can also provide your contact details in your DM, letting them know that they can reach you directly if they have any further questions.

On your website, you can use live chat to engage with site visitors. Live chat helps in improving the conversion rate and customer experience by solving all your customer queries, guiding them in their shopping spree, or booking an appointment.

Using all these customer service strategies contributes to boosting brand loyalty, brings up repeat customers, and increases customer loyalty.

  1. Offer Value-added Services Along With Your Products

People don't only look for items to buy, but they also look for an experience that makes their lives easier. To improve your customers' lives, you can provide value-added services along with your products. This also strengthens the bond between your customers and your brand. Some value-added services include:

  • Personal shopping. Personal shopping can be done online (by sending product recommendations to your customers based on their shopping behaviour) and in-store or through virtual appointments.
  • Subscription boxes. Subscription boxes allow you to curate experiences for your customers. This also prompts them to go shopping again.
  • Free gifts with purchase. You can show your customers that you care about them by giving them a small freebie with the purchase and making them familiar with new products that they will want to buy again.
  1. Create a shopping experience versus a purchase transaction

When customers go shopping, they expect more than just an item they purchased; they look for a shopping experience. You should get creative and brainstorm some ideas to create a unique experience for your customers.

For example, if you have a boutique store, you can offer various stylist services. You can think about different ideas to make your customers' lives easier when providing products and services and implement those services into your customer retention strategy.

  1. Leverage technology creatively

There are many different technologies through which you can build a local, loyal customer base. You can create a consistent brand experience between online shopping and personal store by using other apps.

There's a popular app called Experiences which lets you host classes, tours, events in your physical location through your online store. When your customers are in your store, they can book or check out new experiences through your app.

  1. Embed Instagram Feeds On Online Stores

Customers love to interact with brands and feel valued when any brand considers their review for any of their social media submissions. Using various tools, you can add Instagram feeds to your online store and showcase content from your consumers while using their brands. As all know Shopify is one of the most trusted and used eCommerce platforms, so you can utilize tools that enable you to add Instagram feed to Shopify, and showcase content of your users. It will help you in building strong customer relationships, retaining your consumers and converting them into loyal customers.

Summary: How to Retain Customers in 2021

As mentioned earlier, many brands focus on acquiring new customers rather than focusing on keeping existing customers. Keeping an existing base is as important as attracting a new customer base. So, try to put some effort into building relationships with current/past customers. As these people already know about you and your brand, it'd be easy to retain them. And you can even get referrals from them. Some of the customer retention you can follow:

  1. Set realistic expectations early.
  2. Develop a loyalty program.
  3. Pay attention to customers’ questions.
  4. Dig into the complaints.
  5. Be active on social networks.
  6. Target past customers based on their activity.
  7. Use email to nurture relationships.
  8. Market to customers’ interests.
  9. Engage in social responsibility.
  10. Be honest and transparent.


Even if you are not building an e-commerce business, these tips will help you grow get your customers coming back. Try them out and see your sales grow. Focus your efforts on growing your business instead of the mundane paperwork clutter that is bookkeeping and compliance work. Outsource them to a trusted corporate service provider instead.

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