Owing to the increasing number of businesses going online and the rising competition for consumer attention, businesses are finding it tougher and costlier to acquire new customers. Every customer now has a ton of options to choose from and are quick to switch brands if they feel more valued by the other.
An average company loses 23% to 30% of its customer base each year due to a lack of customer loyalty. Considering the increasing cost of acquiring new customers for eCommerce direct to consumer businesses, it’s time to focus on retention.
Why should D2C focus on retention?
It was found that your existing customers are likely to spend 67% more than new ones. It’s rather cheaper to get your existing customers to shop again with your brand than to find new ones.
But holding on to a customer when they are distracted by products, deals and discounts being promoted by various brands, is easier said than done. It takes more than just delivering a great purchase experience now!
This is where you need to create a customer retention strategy for your DTC brand.
To retain your customers, you need to ensure that every interaction meets their rising standards and you are able to add a human touch to all online interactions. Your competition is probably already working on it, so every little detail matters - from user experience to loyalty programs to customer service.
In this article, we’re listing down some of the customer retention strategies being used by leading DTC brands on Shopify.
Customer retention strategies to grow your DTC (direct-to-consumer) business
Customer retention may look different for different businesses. These retention strategies are based on our observation of what leading brands use to keep their customers coming back for more.
- Get a customer account page in place
- Create a loyalty program
- Create a referral program
- Build a community
- Be proactive with customer support
- Set up a subscription model
- Personalize email marketing as per buyer journey
- Leverage two-way communication with WhatsApp marketing
- Retarget and remarket to your audience and customers
- Get your messages read with SMS marketing
- Reach out to customers on Facebook Messenger
- Request customer feedback frequently
1. Get a customer account page in place
A study revealed that 30% of customers would prefer shopping with a company they’ve already purchased from in the past.
The key to retaining your customers and urging them to come back to you for repeat purchases is giving them an unforgettable shopping experience during their first visit.
Your store’s customer account page plays a huge role in their shopping experience.
A lot of eCommerce stores offer customers 2 options: either check out as a guest or create an account to make future purchases easier. A customized customer account can make it easier for shoppers to make a repeat purchase by giving them instant access to previous orders with pre-filled shipping information.
This gives them a comprehensive insight into their history with you as well, nudging them to trust you again and reminding them of their favourite products from your store!
The Man Company is a D2C brand that has been using a customer account page on their Shopify store. The page enables their buyers to not just keep track of their previous orders, but also make quick purchases from their wish lists or place reorders.
To set up a customer account page on your Shopify store, explore apps here.
2. Create a loyalty program
Online shoppers are always looking for discounts. But continually rolling out big offers on your products is impossible.
Instead use a loyalty program to appeal to these buyers and bring them back to your store. Simply put, it means offering a customer loyalty points or store credits on a purchase they make from you, that can be redeemed in their next one.
Brands like Sephora and Starbucks have witnessed tremendous customer retention through their loyalty programs. Most programs award redeemable purchase points that can be used both online and in physical stores.
This retention strategy can be implemented from the start of a buyer’s journey. Here are some instances where a loyalty program comes in handy:
- Offering a loyalty points and store credits on signing up for a customer account
- Giving store credits or points on first purchases (redeemable in the next)
- Offering cashback after a set number of purchases from your store
- Handing out exclusive deals to loyal customers
- Including special gifts or discounts for customers’ birthdays/anniversaries if they are part of the loyalty program
Here’s what Nykaa’s loyalty program, Nykaa Prive, looks like:
To set up a powerful customer loyalty program, explore Shopify apps here.
And if you’re looking for more inspiration, check out these loyalty program examples.
3. Create a referral program
Ask any brand what their best customer acquisition tool is and they’ll always bring up word-of-mouth marketing.
Your existing customer is your brand’s best advocate and has the power to bring you more customers authentically.
Creating a referral program can benefit both your brand and your customer. A customer referral program offers dual benefits: firstly, it brings in fresh new leads, and secondly, it rewards your existing customers, nudging them to become proactive at advocating your brand for more benefits.
And we all know, once you get a close group involved with your brand, there are lesser walk aways. Here's an example from Jaypore:
To set up a referral program, explore Shopify apps here.
4. Build a community for your DTC brand
Making your customers feel like family is the best way to boost your customer retention. Creating an online community of your customers can have a visible and fruitful impact on your brand’s customer retention goals.
A study conducted by Leader Networks revealed that 49% of communities generate revenue for the brand and 36% of those communities witness higher customer retention as a result.
Customers care about being heard, networking and love maintaining relationships. A brand that creates connections and solves common problems faced by them proactively, will help improve how they feel about the brand.
For example, Nykaa, a beauty and cosmetics brand online, has its own community where customers can seek support and also actively network with others.
5. Be proactive with customer service
One bad experience with customer service can potentially overshadow all great experiences and permanently damage a brand’s reputation in the customer’s mind.
Offer flawless customer service at all stages of the buyer’s journey with your brand. From the first time a buyer comes to your store, to them seeking help for making a purchase and the journey thereafter, interaction at every stage matters.
Improving customer service KPIs like response time or offering a live chat on your website can significantly enhance your buyer’s experience.
Here are some tips to offer a memorable customer support:
- Train your customer support team to communicate clearly with your customers when they reach out for clarification, especially on social media
- Practice active listening when resolving grievances
- Practice empathy so that the customer can communicate their issues freely with you
- Communicate in a respectful manner and use positive language when addressing your customer’s concerns; even when a customer is angry, ensure that you remain calm and positive
- Use a live chat and CRM app that helps you manage incoming queries with ease
To set up customer support and service on your store, explore Shopify apps here.
6. Set up a subscription model
Online shoppers are no longer just looking for deals; they want convenience. That's the number one reason why subscription businesses are growing rapidly in the direct-to-consumer industry.
The market size for the subscription businesses in India was around INR 1,200 crore in 2017-2018 itself. And the global eCommerce subscription market is expected to reach $478.2 billion by 2025.
Subscription based eCommerce allows customers to subscribe to a set of products or services they need on a recurring basis, either prepaid for or via a chosen payment method during the time of delivery.
There are different subscription models that a DTC brand can experiment with, based on the products they sell and who they sell to:
- Curation - Customers who subscribe receive a unique selection of items tailored to their personal needs and preferences, on a regular basis.
- Replenishment - Consumers can automate the purchase of items they use (and finish) regularly so that they receive replenishment deliveries at set intervals.
- Access - Subscribers pay a regular fee to obtain attractive member-only perks from the brand, including exclusive discounts and early access to new products.
Here’s an example of a subscription model set up by Sugarbox:
To be able to set up a subscription model that really works, here are some tips to follow:
- Understand who your customers are and what their buying habits look like
- Identify the products that they require on a recurring basis and the duration of the same
- Create a value proposition to promote your subscription model - eg. get free shipping, subscribe to get 10%
- Ensure your subscription model is flexible and easy to manage (reschedule, resubscribe, cancel, modify)
- Offer popular/ commonly used payment methods to purchase subscriptions
- Create a detailed marketing plan to promote your subscription model
- Monitor the engagement and conversions on your subscription model and optimize as you go
To set up a subscription model on your Shopify store, explore apps here.
7. Personalize email marketing as per buyer’s journey
Email marketing is one of the most effective ways to build customer engagement and is the backbone of a brand’s retention toolkit.
Emails give you the opportunity to build a relationship with your customer before, during and after they make a purchase. But more importantly, they give you the opportunity to personalize and communicate with your customers on a 1:1 basis.
But it’s also true that your customer or subscriber is receiving multiple emails a day from brands similar to yours.
This is where segmenting your customers comes into play. By segmentation, we mean separating your email list into separate lists of subscribers (those who haven’t bought from you), first time buyers, repeat customers, loyal customers, high-value customers; and reaching out to them with messages tailored to match their journey with your brand so far.
For example, for a buyer who hasn’t made a purchase from you, an email marketing campaign promoting your ongoing deals and discounts may serve as good motivation.
But for someone who has purchased from you previously, an email marketing campaign that promotes personalized product recommendations instead, is sure to get more conversions.
The more you’re able to personalize your email marketing campaigns, the better is the engagement with your messages.
The better the engagement with your emails, the higher is the customer retention rate.
To set up email marketing campaigns for customer retention, get the Shopify Email app today.
8. Leverage two-way communication on WhatsApp
With over 487 million WhatsApp users in India alone, the messenger app makes for a promising channel to communicate with customers. And considering how habitual we all are of the chat app, it makes for an important customer engagement and retention strategy too.
Over 55% people feel close to a brand when they connect with it over messaging apps. So make use of WhatsApp to touch base with your customers across their buying journey, similar to how you set up automations on email.
For example, if you’re promoting an ongoing discount or an upcoming sale, send out a WhatsApp broadcast message to notify your subscribers.
When someone places an order from you, use the channel to send out order status alerts and for requesting post-delivery feedback.
Similarly, you can use WhatsApp to also reach out to existing customers with personalized product recommendations based on their previous purchases.
To start using WhatsApp for marketing and customer retention, explore Shopify apps here.
9. Retarget and remarket to your existing audience and customers
A typical internet user sees about 5,000 ads per day. Even if a consumer has made a purchase from you previously, there is a high chance they don’t recall your brand at all! The competition for D2C brands in advertising is growing by the day.
It was found that most new customers drop off after making their first purchase and only 32% actually order for a second time over the course of the first year.
That’s where retargeting and remarketing ads come in to serve as continual reminders of what you have to offer to the consumer. They help you stay on the top of their minds, no matter what brands they come across online.
You can also segment your audience and run these campaigns for contextual messaging, that drives higher engagement and retention.
For example, if someone has bought from you last Christmas, you can use retargeting and remarketing ads to remind them to buy gifts for friends and family this year too!
10. Get your messages read (almost) instantly with SMS marketing
With an average open rate of 98%, SMS is one of the leading communication channels for DTC brands today.
The channel delivers a 45% response rate, and is more preferred by shoppers compared to emails which have a mere 6% engagement rate. This makes SMS marketing a simple, effective solution to traditional marketing problems - especially when it comes to reaching out to your existing customers.
You can set up marketing campaigns to boost customer retention in a similar way as on WhatsApp. From running broadcast promotions to sending out product recommendations and more, you can leverage text marketing across a buyer’s journey for a more ‘instant’ conversation.
Here’s an example from a fashion and apparel D2C brand, Loom:
To set up text marketing campaigns for your Shopify store, explore Shopify apps here.
11. Reach out to customers (and followers) on Facebook Messenger
On Facebook Messenger, people and businesses around the world exchange over 20 billion messages every month. This global rise of business messaging evidently shows that people are more open to engage with businesses over Messenger, even as they continue using the social media platform for networking purposes.
Facebook Messenger lets you automate actions in response to your customer’s interaction with your brand. You can send them a friendly welcome message to new followers, engaging them instantly and learning more about their interests.
You can use similar automations to keep your existing customers engaged with order alerts, product recommendations and similar campaigns.
To set up Facebook Messenger automations for customer retention, explore Shopify apps here.
12. Request customer feedback frequently
When brands make their customers feel heard, they succeed in cultivating strong customer relationships and drive brand loyalty. By gathering and analyzing customer feedback periodically, companies stay in touch with their changing needs and expectations. The feedback you gather can also be used as social proof or customer testimonials that can help convince new buyers as well.
Using your common communication channels, you can set up a campaign that is focused only on gathering feedback.
There are 3 types of customer surveys that can help direct-to-consumer businesses personalize their customer experience and boost retention:
- Customer Satisfaction Survey: Customer satisfaction (CSAT) surveys help companies determine customer sentiment at particular moments in their customer’s journey, like their experience after a purchase, support interaction, and more. Analyzing the CSAT score over time can help teams spot trends and identify key areas for improvement.
- Product Feedback survey: If your brand sells products, your product becomes a major part of your customer’s experience. After a purchase, you should consistently ask for feedback. Product surveys can reveal issues or buyer concerns that are costing you your customer’s satisfaction. Use those results to notify product development, improve marketing, and better understand the impediments to long-term customer loyalty.
- Net Promoter Score survey: The best tool for measuring customer loyalty is a Net Promoter Score (NPS). An NPS survey is designed to gauge the customers’ willingness to further recommend your company to friends and colleagues, and determines if or not they’d come back to you for more.
Here’s an example of communication seeking customer feedback:
To set up customer feedback automations, explore Shopify apps here.
Why is customer retention important and why is it worth the effort?
If you want to grow your business, customer retention marketing is a critical element that you should consider in your marketing plan.
Retaining your existing customers is always easier and more cost-effective than acquiring new ones. Simply because you already know their likes, preferences and purchase motivations.
No matter what stage your business is at, the following statistics prove why customer retention is worth the effort:
- Retaining customers are easier and are affordable than acquiring new ones
- A 5% increase in customer retention can increase company revenue by 25 to 95%
- 91% of the customers are likely to purchase from the brands that recognize them and send them personalized & contextual offers
- On average, 65 percent of the ecommerce revenue comes from repeat customers
- New customer acquisitions can cost five times more than that of retaining the existing customer base
- 86% of the customers prefers to purchase from a brand that offers a great customer experience
Still not sure if you should focus on customer retention? It’s time to calculate your customer lifetime value, and that’s likely to be the convincing argument.
So, is it time for you to focus on customer retention?
You’re probably reading this at the time of setting your holiday season sales goals or as you set some bigger numbers to accomplish in 2022.
You’re probably also thinking that your focus needs to be more on reaching a wider audience and acquiring as many customers as possible.
But what if you spend thousands on trying to reach a new audience, and they don’t buy from you?
What if those who buy from you don't come back to your store next year?
Either way, your efforts go waste, and that’s why we think having your customer retention strategy well thought out and in place is important.
If you have a Shopify store, getting started with these customer retention strategies is effortless with our easy to install apps. Explore them all here.
Also read: How to Turn One-Time Seasonal Shoppers into Lifelong Customers