How to Retain Customers Online
Tuesday June 1st, 2021
Customer retention is a hugely important factor in building a successful business with a loyal user base. It can be a somewhat understated factor too, as vast reserves of company time and energy are so often channeled into generating leads and making new client connections.
However, savvy business owners know that their existing buyers are one of the greatest assets they have at any given time. In short, it seldom pays off to overlook your current clients’ needs and expectations in favour of an exclusive focus on chasing brand new relationships. This is especially true for many new or growing SMEs in the online marketplace, where even the most supportive customer is only ever one click away from spending their money with a competitor.
With that in mind, let’s talk about why customer retention is such a crucial part of healthy business growth, and what the key steps should be in figuring out how to retain customers online.
What is customer retention?
Customer retention data is normally defined by two discrete, but closely connected sales metrics:
Firstly, it’s about how many repeat customers you can attract to your business – that is, how many people you can convince to buy your products or services on two or more separate occasions.
Secondly, it’s about how effectively you’re able to increase your per-customer profit levels over subsequent interactions with your returning clients or buyers. Repeat customers gradually build up a ‘lifetime value’ over the course of their ongoing relationship with your business. If handled correctly, you’ll encourage retained buyers to spend more each time they come back.
The true value of customer retention to a growing business is more widely acknowledged today than ever before, with all kinds of online companies going to increasing lengths to keep valued existing clients onside. It’s a worthwhile endeavour, too: once you figure out how to retain customers in retail, you’ll often find that ROI for repeat buyers is typically much higher than for reaching brand new ones.
Because retention rates specifically relate to those buyers who you’ve already successfully converted at least once in the past, improving them requires quite different skills and strategies to the approaches you’d take during lead generation and initial acquisition. For many businesses, one of the most effective ways to build a better customer retention strategy is to assess their current retention and attrition rates, and then use those as a basis for examining reasons why previous buyers might now be going elsewhere.
What causes customers to leave?
Gaining a full understanding of why customers leave your business will be heavily reliant on gathering detailed and accurate user data. However, even in cases where the available data may be less clear, there’s still huge value in exploring the reasons why former customers might subsequently buy from a competitor.
In most cases, loss of customers from your business can be attributed to one of five common issues:
They find a better price elsewhere
This will always be a risk in any marketplace where competition exists. However, the solution is seldom a race to the bottom – rather, you need to convince your buyers that the value they receive from your business is substantially higher than from rivals, even if the prices you’re charging aren’t necessarily the absolute lowest around.
They find it more convenient to go elsewhere
This is an increasingly vital factor these days, especially in figuring out how to retain customers online. If the actual experience of buying or accessing your goods and services proves to be a hassle in any way (e.g. long wait times, problematic delivery, lack of financing options, clunky web interfaces, issues with shopping cart or checkout processes), that impression is likely to stick with them.
They’re unhappy with a product or service
This could be because it didn’t meet their immediate needs, it fell short of their wider expectations, or they find a rival product that they feel is better. It could also be because your product either did or didn’t change – both can be reasons for dissatisfaction among previous buyers, although a majority of repeat customers will expect to see some evidence of evolution or innovation over time.
They were unhappy with the buyer experience
You’ll lose any chance of repeat business if your level of service or standard of aftercare is seen as lacking in any way. If a customer doesn’t have a great time both during and after dealing with your business, they’ll look to your competitors in future. Offering flexible payment solutions is one way you can drastically improve a buyer’s perception of the overall buying experience – head over to our Retail Finance page to find out more about Duologi’s range of customer financing options.
They no longer need or want the product/service you’re providing
This could be because their needs have been entirely served by buying from you previously, or because for some other reason they’re just no longer active in your market. Broadly speaking, this is one of the few challenges you can’t always do very much about – it’s just part and parcel of retail.
When should you focus on customer retention?
As you’ll be aware, customer retention isn’t an exact science – the best approaches for driving repeat business will be highly dependent on both the nature of your company, and what stage of its ongoing development you’re at.
Very early on in your retail business lifecycle, you will of course be putting almost all of your available resources into generating new leads and acquisitions. You’ll also be unlikely to spend huge amounts of time and effort developing a brilliant customer retention strategy if you provide a product or service that people only tend to buy once every five or ten years.
However, if you’re providing goods of a suitable value and purchase frequency to make retention a powerful factor in sustainable business growth, the time to start channeling more effort into retention strategies comes quickly once you start gaining traction and achieving relatively consistent sales. At this point, it becomes even more vital that you’re providing your current buyers with a stand-out experience ticking all the boxes discussed above.
Proper handling of customer retention plans will go a long way towards building lasting relationships with your clients, which in turn is one of the most effective strategies for growth. Again, it’s much more cost-effective than chasing new buyers, with greater ROI and an increased likelihood of referral custom to boot.