The Secret to eCommerce Retention: How to Keep Your Customers Coming Back
Gulshan Chandan

Gulshan Chandan

January 17, 2023


  • The idea that having a fantastic product or service is enough to have a good customer retention strategy is one of the biggest pitfalls for companies around the globe. But the reality is that it’s not enough, and it is high time businesses adopt tried and tested eCommerce customer retention strategies compiled with the eCommerce trends in 2023.

    Though every company needs new customers, it is equally crucial to increase customer retention rate in eCommerce because acquiring new customers costs five times more than keeping an existing customer. Don’t let the time, money, and effort you put into developing customer rapport go to waste and ultimately result in driving away repeat customers from your eCommerce store.

    What Exactly is eCommerce Customer Retention

    eCommerce customer retention refers to the ability of an online business to keep its customers coming back for more. In other words, it is a metric that measures the percentage of customers who make a second purchase from a business.

    Infographic chart illustrating what ecommerce customer retention signifies for a brand

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    A high customer retention rate is often regarded as a good indicator of a business’s overall health and success, as it means that customers are satisfied with the products and services being offered. You can improve your online store’s customer retention by providing excellent customer service, offering personalized experiences and promotions, continuously improving your products and services, and more.

    Customer Retention Formula

    To calculate the customer retention rate, you take the number of customers who made a second purchase and divide it by the total number of customers at the beginning of the period. Then, you multiply that number by 100.

    the formula to calculate ecommerce customer retention rate

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    Customer retention rate =(Retained customers / Total number of customers at the beginning of the period) x 100

    For example, if a business had 100 customers at the start of the month, and 80 of them made a second purchase, the retention rate would be 80%.

    However, keep in mind that the customer retention rate can vary based on different factors and you should compare it against industry benchmarks and track it over time to see if it’s improving or not.

    Why is Customer Retention Essential for eCommerce Businesses?

    Numerous factors make customer retention crucial, in addition to the fact that acquiring new customers is more expensive than maintaining existing ones.

    According to popular customer retention metrics eCommerce, repeat customers are 50% more likely to purchase from you than new ones and typically spend roughly 33% more money. Therefore, keeping customers is not only less expensive, but it also results in longer-term profits.

    Retaining customers can also assist in lowering your marketing expenses. Yes, satisfied consumers are more likely to buy from you again, but they also recommend you to their friends and family. Compared to advertising, word-of-mouth can generate five times more sales.

    3 benefits of customer retention in eCommerce

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    What is a good customer retention rate for eCommerce?

    Customer retention rate is the percentage of current consumers who keep making purchases from your brand over time. For an eCommerce business, a realistic customer retention percentage ranges from 30% to 40%.

    You’ll have a high customer retention rate if your business gets a lot of repeat business and, if applicable, gets the customers subscribed. However, you can raise your retention rate if your organization rarely conducts business with a customer after the initial order.

    Wondering how to improve your eCommerce customer retention rate?

    9 Proven eCommerce Customer Retention Strategies

    Let’s examine the essential customer retention strategies eCommerce businesses need to adopt right now:

    Retain Customers by Providing a Simple Onboarding Procedure

    Your retention strategy’s initial phase is onboarding, which begins with an educational welcome email. According to a recent study by wizowl, an astounding 86% of customers  say they would continue doing business with a company that actively greets and informs them after making a purchase.

    According to the same study, 55% of consumers admitted they returned a product because they weren’t entirely aware of how it functioned. First impressions matter a lot. Most customers will forget the buying experience after the initial excitement of buying a product. They’re a lot more inclined to stay if it was a positive experience.

    Customer onboarding stages

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    A smooth onboarding procedure can position your eCommerce experience for success for years, as it is a crucial component of customer retention. It should be hands-on, individualized (as much as feasible), and emphasize reducing friction to the greatest extent possible.

    Take Feedback

    Knowing how to make your customers feel is one of the most crucial factors in customer retention. Understanding consumer emotions and what they like and dislike allows you to act on their suggestions, improve your strategy, and better serve their needs. Testimonials help you understand how to cater to your customer’s needs while demonstrating that you care about giving them a fantastic experience.

    To show your customers that you are paying attention and using their feedback to improve, think about creating a personalized thank you note for your survey and replying to their comments directly. The feedback process needs to be well-rounded so that customers feel valued by the eCommerce businesses.

    Loyalty Program

    All it takes for a consumer to leave your service if they don’t feel valued is one slip-up or a “better opportunity” with a rival. It’s crucial to remember not to take your devoted consumers for granted. Incentivize them for remaining.

    Loyalty programs in eCommerce

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    Make your consumers feel unique by connecting them with discounts when they sign up for your loyalty program: Offer them special discounts and early access to new products. This royal treatment is the cornerstone of customer retention in eCommerce strategy since it makes your consumers feel appreciated.

    Even before customers choose this option, you can offer rewards under the loyalty program. For instance, you could include a discount code in the order confirmation email sent to each customer. Offer them the deal immediately, and don’t force them to sign up for anything.

    Effective Email Marketing

    Benefits of email marketing in eCommerce

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    Email marketing is one of the most effective methods for keeping people interested in your brand. A strong email marketing strategy enables you to expand customer relationships automatically. As frequently demonstrated, it has the highest conversion rate of any channel.

    However, you can’t simply bombard your customers with poor offers. Instead, you must provide customers with real value in every email. Understanding the basics of segmentation is essential for ensuring that you constantly deliver alerts to the customers at the right time. Additionally, it’s a good idea to occasionally send non-promotional emails, such as blog posts, to your customers rather than filling their inboxes with offers.

    Boost your Customer Service

    Graph illustrating different channels of customer experience

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    Customer service assists you in providing your customers with the right level of support and communicating with them efficiently. Why would customers return for a second visit if dissatisfied with your services? Basically, if someone complains to you, don’t ignore them. The best action is to take care of it immediately and ensure your eCommerce customer experience is delightful and organized.

    According to data, people consider quick, amiable, and consistent customer service the gold standard of any business. You can benefit if you help the customers avoid issues and make the most of your products.

    Focus on Lost Customers

    Customers feel unloved, underappreciated, and unwanted because of poor customer experience and customer service efforts.

    It will be crucial for subscription eCommerce firms to pay attention to these areas. You can enhance your customer experience by establishing objectives and tracking progress toward significant metrics like the typical customer wait time. Consider customer service as an investment in customer success and retention rather than as a cost center.

    A variety of customer retention methods can help you achieve this. Weekly email newsletters, social media competitions, and the creation of high-value content, such as blogs, videos, podcasts, or downloadable PDF files, are all effective strategies.

    Case Study: How we helped a leading eCommerce brand overcome 8 major obstacles

    Personalized Communication

    Personalization is the key to eCommerce retention. Two-thirds of your customers expect that you are aware of their unique demands and preferences, and 52% anticipatethat each of your offerings will be unique.

    However, customization should be more than just including a customer’s name in emails. Customers who feel that a brand is interested in them and their goals are known to receive customized products and content recommendations.

    It will eventually encourage customers to spend more for your products and your top-notch customer service based on their past purchases and search history, suggesting products. Otherwise, you might provide them with free materials like blog entries, product videos, and customer reviews to help them learn more about your company.

    Referral Programs

    Referral program website screenshot of Gillette

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    Programs for encouraging customer referrals are a vital component of customer retention tactics that have a proven track record of success. Referral programs will attract many new customers in addition to aiding in the retention of existing ones. This program has two key advantages: first, it generates new leads, and second, it rewards your customers.

    You’ll get better results from a strong customer referral program than through phone calls or sponsored advertisements. If you succeed in fulfilling the needs of your current customers, they will refer to new, high-quality prospects as a result of your efforts and the benefits they will receive.

    Be Active on Social Media

    You cannot retain customers if they ignore you. And communicating with customers on social media is one of the best ways to remain relevant. The average customer retention rate of eCommerce depicts how strong your social media game is.

    Integrate social media into the customer journey if it’s a part of your customer retention strategy, which it should be. Add social media sharing buttons to your bottom, checkout, and contact page.

    Announcing new products, offers, and other changes on social media can also help you increase customer retention rates. That’s a fantastic technique to get people talking about your social media platforms.

    The Conclusion

    You can extend the typical customer retention span of your eCommerce business by using effective customer retention techniques. Keep in mind the areas where your customers demand improvement when you execute customer retention tactics, assess all the data about your customers, and choose the best ways to reach them. The better an eCommerce company is aware of the eCommerce challenges and their solutions, the higher the eCommerce customer retention rate.

    Want to get customer feedback to assess customer happiness and enhance the entire customer experience? By registering for a free consultation with Technocrats Horizons, we’ll provide you with the customized eCommerce solutions you need to raise your retention rate and increase your revenue.

    Get a free consultation for creating high-caliber eCommerce customer experiences
    About The Author
    Mr. Gulshan Chandan, Customer Experience Head of Technocrats Horizons Compusoft Pvt. Ltd, is the driving force behind the company's success. With over a decade of experience in the industry, he is on a mission to redefine what it means to deliver exceptional customer service. Mr. Chandan is passionate about building lasting relationships with customers and is always looking for ways to go above and beyond to ensure their satisfaction.

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