Ecommerce

Customer Retention Strategies for DTC Brands

What if you could increase your revenue by 11 times within 90 days, by just focusing on your customer retention?

That’s exactly what HomeWorx, a fragrance brand, was able to achieve with their DTC ecommerce channel. With an increase of only 25% in customer retention, they increased their revenue exponentially by 11 times.

Quick definition: Customer Retention is your ability to create long-term returning customers who are loyal to your brand and products.

Higher customer retention means higher profitability per customer. As loyal customers stay with you longer, their customer lifetime value increases, with your customer acquisition cost (CAC) remaining the same.

Data backs it up, too. Increasing your customer retention rate by just 5% can bring in more than a 25% increase in profits. What’s more, it’s 6-7 times cheaper to retain your existing customer than acquire a new one. They’re already aware of your brand and quality, compared to a new customer who needs a long process of nurturing to convert.

With the right nurturing and engagement at the right time, your existing customer base will keep coming back for more. This is where having customer retention strategies comes in.

Customer retention strategies aim to create a strategic approach toward keeping existing customers satisfied. One-time purchasers become loyal, repeat customers make more purchases, and referrals come in when a customer retention plan is implemented successfully.

5 Customer Retention Strategies for Ecommerce Brands

Now that you know how important it is to retain customers, here are some strategies to help you do that while building better customer relationships.

1. Customer Loyalty Programs and Gamification

Customer loyalty programs provide incentives to your customers for being loyal to you. When they buy from you again, they get points, discount coupons, and other rewards based on the program. This keeps them from slipping away to your competitors as they get extra benefits for staying with you.

You can create referral programs, membership clubs, and use gamification to make the program exciting. With gamification, you include game-like aspects such as point scoring and competition with others in the program. It’s a great way to create interest and more customer engagement for a better overall experience.

The Turmeric Co, a natural supplement brand, introduced a loyalty program to increase their retention rate. Within 12 months of its launch, they doubled their CLTV and increased their customer retention rate by a whopping 60%. They gamified their program and introduced different ways to earn points like:

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2. Personalized Customer Experience

You already have access to existing customer data, including customer behavior and their likes and dislikes, which you can use to hyper-personalize the experiences of your customers.

Personalization can yield up to 20% higher customer satisfaction rate along with cutting marketing and sales costs by around 10-20%.

Personalization at scale doesn’t have to be difficult either. You can segment your customers in cohorts based on their first purchase, order type, and more. Based on that, running personalized campaigns becomes easier and brings you closer to customer expectations and needs.

Sephora, a retail cosmetic brand, uses personalization to stand out from their competitors. It has mastered the art of sending personalized emails, push notifications, and suggestions to customers from data collected via quizzes.

Sephora and Ulta Free Birthday Gifts for 2022 - Gift With Purchase

3. Provide Top-Tier Customer Support

From responding to positive feedback to taking notes of grievances, customer support is your chance to make your customers feel valued. As a result, customer satisfaction rises with customer retention and loyalty. Great customer support and customer success infrastructures are critical for e-commerce brands.

96% of customers would continue to buy from a company that apologizes and corrects their mistake.

BoxyCharm, a makeup subscription brand, has an excellent approach to customer service. With automation, they’re able to respond to their customer tickets within 60 mins and offer over 50 response variations to maintain authenticity.

4. Create Email Campaigns to Nurture Your Customers

Email marketing has an unbelievable ROI of over 4000%. While it may seem wild, it’s not surprising. With drip emails, you’re keeping yourself at the top of the mind of your customers.

Sending emails like welcome emails, post-purchase emails, order confirmation emails, and abandoned cart emails keeps customers informed and aware of your brand. Club it with customized thank you and apology emails based on customer feedback, and you can forge a strong bond with your buyers. This is a marketing strategy that is easy to execute and automate once you have your foundation set.

Shapeways, a 3D printing service company, increased their click-through rates by 525% with personalized email campaigns. They weren’t just seeing purchases, they were also seeing a large number of customers responding to their emails. They did this by creating campaigns tailored to the customer’s purchase cycle. For example, for customers still in the consideration stage, they create informational emails like below:

Shapeways: Free Webinar: SLS 3D Printing | Milled

5. Offer a Subscription Program

Subscription programs are the key to consistent revenue for your brand. With subscriptions, you offer discounts to your customers for staying with you for a longer period of time and placing consistent orders in advance. This is huge for reducing customer churn and getting the most out your current customers. The lower the churn rate, the more valuable customers you’ll have over time.

It works because it’s convenient for your customers. Over 83% of customers surveyed in 2020 said that convenience is more important today, compared to that in 2015. Sometimes it’s less about marketing new products and more about consistent fulfillment of what your customers need.

Dollar Shave Club, a men’s grooming brand, had the challenge of competing with existing brands in the market. However, with the price of $1 for razors at the time of launch, they were able to capture a large chunk of the market, earning 12,000 subscribers in a single day.

Compared to their cost of acquisition, their LTV was much higher with a customer retention rate of 33% even after two years.

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Customer Retention Software

Customer retention is a marathon rather than a sprint. Here are some tools to help you create long-term strategies and automate the process:

  1. Yotpo for customer loyalty Program: Use tools like Yotpo to create loyalty and referral programs from scratch. You can create personalized and on-brand programs to attract new and existing customers.
  2. HubSpot for customer support: HubSpot is a CRM tool with diverse conversational features designed to make communication with customers as simple as possible.
  3. Klaviyo for email marketing: Klaviyo specializes in sending personalized emails to your email subscribers. From price drop alerts and cart reminders to shipping updates, Klaviyo keeps your customers engaged, thus increasing your brand loyalty and customer retention.
  4. ChargeBee for subscriptions: Chargebee helps you create your subscription program by setting up automated payments methods and subscription management.

Analyzing Customer Retention in Peel

Once you’ve set up these retention strategies, you next want to track and analyze their performance to understand if they’re working (or not).

Based on metrics like average order value, frequency of orders, return rate, and more, you can figure out the effectiveness of each of your strategies. Based on the data, you can implement tweaks in the strategies for better results.

But how do you actually track multiple key metrics at the same time? Excel is clearly not an option.

The only viable way to track such advanced metrics and get the most out of them is to use an AI-powered tool like Peel. It saves you time and eliminates the risk of human error.

You can view different customer retention metrics in Peel with a single click to understand your customer behavior:

  1. Repurchase Rate: The percentage of customers who return to buy from you again is your repurchase rate. It’s a clear indication of customer retention and loyalty.
  2. Customer Returning Rate: Knowing how many customers return and when they return can help you figure out who your top customers are and what marketing tactics are working.
  3. Days Since First Order:  The average period for a customer to place a second order is 45 days, indicating that it’s time to send an email for repurchase. Peel keeps track of the days that have passed between the customer’s first and second order.
  4. Repeat Orders Rate Per Cohort: The repeat order rate is calculated by dividing the number of repeat orders by the size of a cohort. This indicates the probability of customers returning by a specific month.

There are other cohort metrics like the number of orders per month and average orders per customer to help you analyze customer retention in depth.

Get started for free with Peel today to tap into the power and profitability that comes with customer retention and understanding more about your customer journey.