Chloe Recommends…. An approach to Customer Retention

by Chloë Thomas

If you’re looking to improve customer retention here’s my guide to getting started.

When we talk customer retention in eCommerce we’re basically meaning selling more to each customer – getting them to order from us more times.

That’s my focus here, how do we encourage past customers to order again. (simple when you put it that way isn’t it!)

customer retentionStep 1 = Identify where you are

It is always important to work out where you are starting from, so you can work out where you want to get to!

Two parts to this – understand the numbers, and work out what you’re already doing.

On the KPIs (key performance indicators) side of it I’m recommending you start with a very simple customer retention metric (if you have the analytical fire power to go more indepth – by all means do so, but we want to get the KPI quickly and easily so we can get on with improving it!).

With all of these you are looking to benchmark against yourself – so how do you improve over time.

Simple Customer Retention KPI

Average number of purchases by customer – take the total number of orders you have ever processed and divide it by your total number of customers.

EG total number of orders = 5,000

Total number of customers = 4,500

Average order per customer = 1.1

Your aim will be to increase this. Maybe the first aim is to get it to 1.5?

We then need to understand what you’re already doing to encourage a repeat purchase, so take a look at all your marketing and customer interactions and work out what that is! (you’ll probably find some easy improvements as you do it). This list will probably include…

  • What we put in the parcels
  • Order confirmation emails
  • Customer service interactions
  • Email newsletters
  • Social media posting
  • Catalogue mailings

Step 2 = decide what your customer retention strategy is

It’s important to work out which of these is right for your business – because each requires a different approach.

  • Consumables – if you sell vitamins or toiletries you make a pretty good guess about how frequently your customers need to restock
  • The Sweet Spot – is there a point at which your customers are most likely to buy again? Sainsburys (UK supermarket) know that the best time to migrate someone to online deliveries is the week their baby is born, and the time they loose most online customers is about 6 weeks after the baby is born when the mother needs a reason to leave the house!
  • Just Get Them In The Habit – lots and lots of analyses show that the sooner you get someone to buy from you again the better a customer they will be.
  • It’s That Time of Year Again –you run a seasonal business (gardens in the spring, gifts for Christmas)

Step 3 = design the marketing mix and messages that fit your strategy

I’m going to run through each strategy in more detail below. But first a word on marketing mix.

These are your customers. You should know a fair bit about them:

  • Email address
  • Phone number
  • Postal address
  • Website cookies stuff

Therefore we can be much more targeted in our approach. And we can use marketing methods that play to these. Ideally with a fair bit of personalisation – these days it’s very cheap to personalise even paper mailings.

So think:

  • SMS text messaging
  • Email marketing
  • Postcards
  • Remarketing via Google and Facebook

The Consumables Strategy

It is all about reminder messages.

Each triggered to go out at the right time for the customer to need to re-buy the product.

“it’s a been a while since you bought X”

Tests:

  • Marketing method – is it email? Sms? Post?
  • Offers – do you need to offer a discount? Is it worth upselling at this point?
  • Is it worth reminding them to take the vitamins? I’ve seen some SMS tests of this that are highly effective – but it’s got to be the right product (no one should need a text to remind them to wash their hair – but an intense monthly hair treatment….!!)

The Sweet Spot Strategy

Find a way to identify the sweet spot.

In travel people usually book their holidays in the same month each year – so a marketing activity that reaches them during their buying month is a good move.

OR they book as soon as they get back from the last one – so marketing immediately after the holiday is great.

Personalised postcards featuring where they stayed can work wonders.

Sometimes it’s someone’s own birthday that triggers it – that’s why restaurants send people “”happy birthday” emails.

Or if you’re agift business it might be someone else’s birthday…

To test:

  • Which sweet spots work for your customers?
  • Obvious or subtle messaging?
  • Promotions?

The “Just get them in the habit” strategy

Very simply here we just want to get the next order within days of the first order.

And it’s almost certainly going to require bribery.

You’ll want a very compelling offer in their parcel, and to repeat that to them across every marketing method you have – email, remarketing, Facebook etc. With a strong deadline.

To test:

  • Which marketing methods are worth using
  • The offer

The “It’s that time of year again” strategy

This one starts to bump up into everything else you do. It’s a bit more broadbrush, and basically requires being very clever with you marketing budgets and plans!

Things I would do:

  • Mail everyone (on and offline) for the peak buying periods
  • Use a VERY long cookie capture of website visitors to target a big display network campaign on Google
  • Similar strategy on Facebook
  • Similar strategy for RLSA on Google

What’s your client retention strategy? Have I included it? I’d love to know.