Higher retention rates don’t just improve revenue, it improves your brand’s promotability. The most effective customer retention strategies often result in shoppers becoming loyal supporters of your company and products, giving you the chance to grow your business through word-of-mouth marketing. 

Customer retention strategies are diverse—every merchant should come up with their own formula for success based on their customer expectations and the ways they’ve successfully retained customers in the past. This blog post will explore some of the secrets and strategies to obtaining a high customer retention rate. 

What exactly is customer retention?

As defined in our ecommerce glossary, customer retention is the ability of a company to keep current customers with their business. Subscription models depend on recurring revenue, so customer retention becomes an even more important factor for merchants in the subscription space. High customer retention rates mean:

• Increased customer lifetime value (LTV)
• Improved customer loyalty
• Greater customer satisfaction
• Higher average order values (AOV)

By focusing on keeping your current customers happy, you will improve your customer retention and even motivate customers to share your product or service with their friends and family. Loyal customers will stick around and become a great marketing tool for your business. 

The secret to retaining customers

Understanding what your customer’s needs are and identifying them before they have a chance to shop elsewhere is of the utmost importance. How do you know what these needs are? Listen. 

If you are not acquiring customer feedback about your product or business, there’s no way to know what your customers are really looking for. This also shows the customer that you want to make the experience the best it can be for them, building trust as you provide an unforgettable customer journey. Collect customer feedback and incorporate it into your business plan by identifying specific churn points and improving the customer experience. 

While there is no magic formula to succeeding at improving customer retention rates, looking at your retention metrics and analytics is a great place to start. The customer onboarding experience is usually one of the best places to jump into first. Typically, this is where you see the sharpest decline in customer fall off—during customer acquisition. The customer journey and overall experience are key not only for the initial checkout, but also in terms of customer retention.

Bite has a beautiful shopping experience from the beginning—customers aren’t left guessing about their products or offerings, and they’re directed to a subscription model right away with prices listed by month.

Effective retention strategies to put into play

The secret to high customer retention is often a mix of these different strategies. When combined, you can find the winning combination for keeping your customer base interested and engaged in your brand. Whether you choose to invest in effective email marketing or start a rewards program for subscribers, you will see your retention rates increase. 

Customer service

Nothing says “I’m coming back!” like a good customer service experience. We’ve all had bad experiences and likely haven’t returned to that business in the future. But the good experiences we remember and walk away from with a smile. According to Forbes, small tweaks to your customer service offerings can mean big gains in customer retention metrics. 

Email marketing

Don’t neglect email marketing. It’s a very important process to many successful retention strategies. Providing monthly discount codes to show appreciation—or offering special subscriber-only incentives—are a few ways to keep customers coming back.

Ask for feedback

Repeat customers can provide you with important feedback on how to improve the customer journey. Offering ways to give feedback or sending occasional surveys can help improve the experience for your new customers and build trust with existing customers.

Customer loyalty programs

Improve customer retention by incentivizing your shoppers with a loyalty program. By acquiring points on each purchase, they are motivated to make another purchase and continue spending more with your business. Brands with thriving loyalty programs often have high customer retention thanks to the community and feeling of belonging that they’ve built around their business. 

Along with their deal of the day, Super Coffee offers subscribers incentives like free shipping and other special treats to unlock after they spend a certain amount of money.

Upselling

This isn’t just about boosting customer lifetime value (LTV), it’s about making value-added recommendations for the customer based on previous buying patterns.

Referrals

Similar to a loyalty program, referrals reward customers for helping you acquire new customers. By offering attractive discounts or rewards for customers to attract friends and family to your store, you can increase retention. 

Personalization

With the ability to customize virtually every aspect of the customer journey, from pre to post-checkout, you can make recommendations based on the customer’s previous purchases. Personalization makes shoppers feel more at home when browsing your site or receiving communication—such as emails or text messages—from your brand.

Social media

Be sure to stay connected on social channels to build and nurture customer relationships. Whether you decide to focus on Instagram, LinkedIn, or YouTube, providing a place for customers to connect can increase brand loyalty and therefore, customer retention.

Customer portal

Creating a user-friendly customer portal is a customer retention strategy that merchants should not neglect. When customers can easily manage their subscriptions in a portal, you are actively working to reduce churn and increase customer retention.

Experimenting with customer retention strategy

These are only some effective ways to help retain your customers. Experiment with what works best for your industry and customer base. Keep an eye on your analytics to look for trends and upticks in retention rates, and don’t be afraid to try new tactics.

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The shopping process: from browsing to delivery

Ecommerce customers come in all forms, but all have an inherent level of trust when clicking the “PAY NOW” button. After a transaction occurs, the process is out of their hands and in the control of the merchant.

This is a completely intangible experience, one that occurs millions of times a day all over the world—and it cannot be overlooked. What the merchant does after that button is clicked has a huge effect on the customer and their overall experience with the brand.

Let’s run through the fundamental buying process:

1. A customer finds a website and decides they want to buy a product.
2. The customer adds that product to their cart and heads to checkout.
3. The customer inputs all their billing and shipping information, then pays for their purchase.
4. Some time later, the shipment arrives and the customer unboxes their purchase. 

While it may seem like an easy, breezy four-step process, there’s nuance within each step that can make or break the customer’s opinion of the brand. This is where the customer makes up their mind as to whether or not they want to remain loyal to the company—known in the ecommerce world as the customer experience.

So, how does your brand create an excellent customer experience that sets you apart from the competition and keeps your shoppers coming back? To answer that question, let’s back up and break down those buying process steps in a little more detail.

How to optimize your customer experience

First things first: The shopper has to find your site. As a merchant, if you’re one of the lucky ones to have your ad or link clicked on to acquire a site visit, congratulations! That’s half the battle right there. (I could write a whole other article on this topic, but I digress.)

From there, the shopper peruses your site looking for that perfect product. In order to do this, they need to trust your brand—and that’s not something that most people take lightly.

Does the website and product detail page (PDP) look professional? Are the photos high-resolution? Does the product description match what I’m looking for? Does it come in a color I like? Do they have my size? Is it non-GMO/organic/vegan? These are just some of the questions that the shopper might ask themselves before deciding to trust your brand and add a product to the cart. 

Generally, around 10% of shoppers who make it to the PDP will add the product to their cart. The other 90%? Well, the product (or presentation of it) didn’t check any or all of their boxes. That’s ok—you’ll never win them all. But that 10% who do add your product to their cart are about to become your customers. Once you’ve won them over, they’re here to stay at least for one billing cycle. 

Therein lies the catch: one billing cycle. But as a brand, it’s in your best interest to retain this customer for several months. How can you accomplish this? By looking at the customer experience. 

How is this customer going to interact with your products and your store now that they’re here? Things like your email or SMS notifications, restock reminders, new product marketing campaigns, and customer portal all have a huge impact on the customer experience.

That experience doesn’t just stop after your customer purchases the product. During the shipment process, many organizations send along information via email to set expectations with the customer—ideas for how to use the product, what to expect in the box, and how to buy more once they run out. 

Once the purchase arrives, the unboxing experience paves the way for your customers to emotionally connect with both your product and your brand. Remember, you have one chance at a first impression—don’t send your product in a generic bubble mailer. Consider special touches that you’d personally like to receive with your own purchases, including discount codes for future purchases, stickers your customer can give to friends as a referral, suggestions for complementary add-on products, or even a brief step-by-step guide on how to log in and manage their subscription, if applicable. The important thing: to go above and beyond the purchase experience to create an emotional connection between your brand and customer. 

When it comes time for the customer to make changes to their own subscription, the customer portal is the command center. To ensure your subscribers stay with your business, make it clear to them how easy it is to update their billing information, shipping address, add a product, skip a cycle, etc. Consider transactional SMS tools like RechargeSMS that allow your subscribers to make purchases with a quick text message. That means they can manage their orders straight from their mobile devices, no logging in to your website required—making the experience that much easier and more seamless. 

No matter how amazingly designed or intuitive your customer portal is, some customers will always require additional assistance. This is where your support team comes in. Ensuring your team is happy and enjoys what they do will translate to your customers as well: Happy employees mean happier customers.

When it comes to add-on product recommendations, there are lots of amazing tools out there that use AI and machine-learning to predict products your customers would likely purchase. These suggestions are based on factors like their previous purchases, sites visited, and more. As personalized shopping is becoming more and more prevalent, this is becoming something your customers expect for a positive experience.

To sum: Remember the golden rule. Take a step back, put yourself in your customers’ shoes, and consider how you would want to be sold to. Then, improve your process accordingly. This is how you deliver a best-in-class customer experience—and in terms of turning your one-time customers into subscribers, it’s what makes all the difference.

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Subscription popularity with consumers

DTC subscriptions really started to hit the scene in the 2010s with pioneers like Birchbox and Dollar Shave Club, whereas SaaS and streaming services came about even sooner—1999 and 2007, respectively.

Even with the consumer gain in comfort prior to 2020, the shopping climate changed dramatically as consumers spent much more time at home. With the COVID-19 pandemic, storefronts closed, and the need for recurring goods and services rose sharply. 

Whether they were looking for replenishment items like toilet paper and laundry detergent, or more curated goods like skincare products and craft supplies, consumers leaned into the convenience of subscriptions arriving at their door at regular intervals. 

Additional consumer benefits

Consumer comfort with purchasing online products on a recurring basis has risen not only out of the necessity of the last year, but also because subscriptions benefit consumers in additional ways. 

• New product offerings in curated boxes create “surprise and delight” moments that curb boredom and create a sense of excitement for each monthly shipment.
• Replenishing consistently used items right as they run out creates a time-savings factor, in that customers no longer have to venture to the store to re-up on those items.
• Customizability with subscription brands is exceedingly popular and helps to foster a long-term relationship between customer and brand. Putting customers in full control of their product set, delivery schedule, and upsell opportunities creates huge upside in the way of engagement. 
• Subscriptions generally save customers money in the long run. The popular phrase “subscribe and save” rings true for the majority of subscriptions that customers are investing in. As long as the value is clear and up-front, the investment takes a lot less convincing. 

Subscription popularity with DTC brands

Not only are subscriptions a win for consumers, they are also a huge win for the merchants selling them. At their core, subscriptions allow merchants to realize recurring revenue. The predictability allows for more strategic business decisions to be made, while also amplifying growth potential month over month. 

The cumulative impact of subscriptions 

A merchant begins their subscription offering in January and gets 10 subscribers that first month at $30 each, totalling $300 in subscription revenue in month one. In February, the merchant gets 15 new subscribers, also at $30 each, totalling $450. However, they also still have those first 10 subscribers contributing their dollars in February for their next shipment, so we add $300 to the $450 to get $750. Finally, let’s tally in March’s subscribers. Our merchant may have acquired 15 more subscribers at the $30 order price. So now for the final month we have $450 from March, $450 from February’s subscribers, and $300 more from January’s subscribers. The grand total for March is $1200. And our grand total for the quarter is $2250.

To provide context here, if our merchant did not have subscriptions in place, but had the same amount of customers as above in each month at the same average order price, their quarterly total would come to $1200. 

Additional benefits to DTC merchants

• By offering customers opportunities to engage, i.e. with transactional SMS or via the customer portal, merchants can see an overall increase in lifetime value by 15–32%. 
• Building a brand community with loyal fans increases not only lifetime value, but also aides in word-of-mouth referrals.
• Subscriptions tend to result in higher average order value (AOV) for customers, as they are presented with cross-sell and upsell opportunities.
• Singular transactions become more than that, in that subscriptions are a regular interaction between customers and brand. This can result in a long-term relationship and regular, actionable feedback.

It is estimated that the subscription market will grow to almost $500 billion by 2025. The leading result of this boom in subscriptions is that familiarity and convenience creates popularity among consumers and merchants alike. Overall, merchants are primed to amplify their product offering with a subscription opportunity for their consumers.  

Not yet offering subscriptions? Get started with Recharge for free to create a seamless subscription experience for your customers.

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