8 Factors that Affect eCommerce Customer Retention

So you’ve created a killer marketing, merchandising, and sales strategy that’s making your online products fly off virtual shelves. 

However, your work isn’t over. After a customer checks out, the post-purchase buyer experience kicks into play — and it’s your chance to nail customer retention, extend customer lifetime value, and boost your bottom line.

This article covers actionable tips to build your own repeat revenue-generating tactics that secure conversions with half the work. 

Recap: What is Customer Retention?

Customer retention is the ability to keep existing customers returning to your store and purchasing from you time and time again. It’s different from customer acquisition, which is the ability to bring net new customers to your store. 

How to Calculate Customer Retention

There are various ways to calculate and represent eCommerce customer retention, but the most common calculation is to look at how many customers you gained in total over a period of, how many are returning customers, and divide that by your total number of customers. 

Why Customer Retention is So Important

According to growth marketing expert Brian Balfour, “if your retention is poor then nothing else matters.” You’ll eventually run out of leads, and your acquisition funnel will degrade in quality.

Customer retention affects…

• Growth: Retention plus it provides a second revenue stream to accelerate your growth. 
• ROI: You can increase overall company revenue 25-95% by increasing retention 5%.
• Affordability: It costs five times less to retain an existing customer than gain a new one. 
• Customer lifetime value: Get a higher CLV when returning customers buy more often and spend more money.
• Referrals: Create loyalty that results in more positive reviews for your business. 

8 Factors that Affect Customer Retention

Now that we’ve covered the importance of retention, let’s dive into the different factors that affect it.

1. The Original Purchase Experience

Will your buyers remember their experience with you as easy and enjoyable, or complicated and stressful? This will influence whether they purchase from you again, or leave in search of a better option.

There are plenty of factors that go into the customer journey, but there are a few main things to focus on to provide a seamless experience.

• Product discoverability: Figure out where your audience likes to shop and make sure you sell on those channels.
• Website navigation: Make it easy to explore your website and find what they’re looking for. Don’t confuse shoppers with complicated page navigation and too many menu options.
• Inventory availability: Stay in stock, so shoppers can get their items ASAP. If you can’t avoid going out of stock, provide backorder options.
• Payment options: Give your shoppers the option to pay how they want to. You should allow guest checkouts, and multiple payment options like PayPal, Apple Pay, and the standard credit card checkout.

2. Delivery Speed and Reliability

More than one-third of shoppers won’t return to a retailer following a lousy delivery experience — making shipping a key customer retention factor. Delight your customers with fast and free shipping, tracking information, and reliable delivery.

Tip: 2-day and next-day delivery can be your differentiator. We’ve seen conversions skyrocket 300%+ with fast shipping.

3. Customer Service

Nearly half of customers buy more following a good customer service experience — even if that experience involved an initial complaint. Not all customer service has to involve a complaint either – you can provide customers with proactive support that makes them feel valued. 

Examples of proactive eCommerce customer service include hassle-free returns and pre-paid postage, a post-purchase email that includes instructions for use, and a feedback survey.

4. Convenience

Two-thirds of shoppers are more loyal towards brands that make it easy and convenient for them to re-engage with. Finding, researching, comparing, and signing up to online stores and marketplaces is time-consuming, so it makes perfect sense to want to save some time if they discovered a convenient shop.

Use this to your advantage by encouraging repeat customers through:

• A customer account that stores contact and payment information
• 2-day and next-day shipping for urgent purchases
• Subscription options for products they regularly purchase
• Instagram and Facebook Shops for buying products via social media

5. Incentives

There’s nothing more frustrating for an existing customer than seeing new customers treated better than they are.

Repeat customers want a reason to shop with you again and to be rewarded for their loyalty. When you’re saving money on marketing, customer retention incentives don’t have to break your profit margins, either. 

Popular incentives for existing customers are:

• A loyalty program that rewards customers the more shop and spend with you
• A referral program that rewards customers for recommending you to family and friends
• One-off incentives that surprise and delight customers, such as a $10 coupon on their birthday

6. Personalization

You already know personalization is essential for sourcing customers. It makes them feel valued and special. 

Your existing customers are no different. Plus, you already have their information, which makes personalization a little bit easier.

Interact with your existing customers on social media, send them curated product recommendations, celebrate their joining anniversary, and send them relevant marketing campaigns. 

7. Marketing

Just because existing customers know about your store doesn’t mean you should stop marketing to them. 

You must still grab their attention in their inboxes, on Google, and via social media to remind them about your store and attract them back to your product pages.

This includes:

• Sending targeted email, SMS, and push notification marketing campaigns
• Optimizing your social media ads with standout information, such as dynamic fast shipping tags
• Using eCommerce SEO tactics to rank high for relevant keywords on Google
• Qualifying for fast shipping programs, such as Walmart TwoDay, to increase visibility on online marketplaces

And don’t forget to keep your newsletter consistent, even if you aren’t actively trying to make a sale. You can share fun and friendly updates around their interests, announce new product lines, and provide regular offers.

8. User-Generated Content

Have you ever gotten that warm fuzzy feeling when a brand you love shares your review, photograph, or Instagram story and tags you? Your most loyal customers feel the same.

User-generated content is social proof that attracts new customers to your social media profiles and D2C store. It’s also highly engaging for existing customers, especially if they’re the star of the show.

By showing your appreciation of existing customers, and showcasing their content around your brand, you create trust and familiarity that leads to repeat purchases. 

Wrapping It Up

Your existing customers are essential to your future — invest some time to understand their buyer journey and what keeps them coming back. Take those insights and optimize their experience every step of the way to create and retain loyal customers. 

About the Author

This is a guest post from Rachel Go, senior content marketing manager at Deliverr. Deliverr provides fast and affordable fulfillment for your Shopify, Walmart, Amazon, eBay, Wish, and BigCommerce stores, helping to boost sales through programs like 2-day delivery for Shopify, Walmart 2-day delivery, eBay Fast ‘N Free, and Wish 2-day.

Deliverr’s FBA-like multi-channel fulfillment comes with clear pricing, easy onboarding and a hassle free experience so you can focus on growing your eCommerce business.