5 Tips for Boosting Retention Rate in E-Commerce

Getting new clients is hard. Keeping them is even harder. Here’s how to be better at both.
Headshot of Vitaly Alexandrov
Vitaly Alexandrov
Expert Contributor
August 10, 2021
Updated: August 18, 2021
Headshot of Vitaly Alexandrov
Vitaly Alexandrov
Expert Contributor
August 10, 2021
Updated: August 18, 2021

As with any other long-term relationship, building retention takes time. Every industry approaches retention rate growth differently, including e-commerce. There are unique approaches to customer segmentation and satisfying clients needs that e-commerce must employ to ensure a good retention rate.

To help boost your retention rate in the e-commerce sphere, here are a few tips to keep in mind.

Boost E-Commerce Retention With These 5 Tips

  1. Solve the problem that’s the most important to the client.
  2. Be the most effective at solving your client’s problem.
  3. Segment your clients.
  4. Take care of your clients.
  5. Introduce new value.

 

Solve the Problem That’s the Most Important to the Client

This should be your top priority. Aim to do this as early as possible. Before scaling your product, you have to ensure that it solves some important problem or provides new opportunities and abilities for potential clients. Find your early adopters, and utilize their honest feedback before moving forward in the process.

For example, we initially created an invite-only Facebook group for our target market and invited our first loyal customers to join. In exchange for discounts and gifts, we were able to get honest, valuable feedback about whether or not we were bringing a practical, sustainable solution to our clients. Focus groups like these allow you to pivot or enhance your product range and services before you commit to scaling up.

Opening and maintaining a two-way communication channel with prospective clients is a simple-yet-essential step toward boosting your retention rate.

 

Be the Most Effective at Solving Your Client’s Problem

Once youve established that you can solve the problem, youre halfway there. Solving the problem doesnt guarantee success, however. You have to do so in a way thats innovative and effective.

As an example, no communications startup could successfully launch yet another instant messaging platform. The market is saturated, and it would be nearly impossible to pull users away from established platforms to test a new product thats solving a problem they dont have anymore.

However, if our hypothetical startup could offer a truly unique feature, such as telepathic brain-to-text messaging, they could easily pull a large user base. As long as the product worked as advertised, their retention rates would be phenomenal. Why? Because not only are they solving a problem, but theyre doing it in a way that nobody else is, and theyre doing it well.

Since we’re nowhere near telepathic texting just yet, a more doable feature for our hypothetical startup might be sending nudges or reminders to answer texts after a certain amount of time. This would help forgetful or busy users remember to answer that text they opened and then forgot to respond to.

In our case, its the same. Food delivery isnt rocket science, and its not a new concept. Our success comes from how effective we are at solving this problem. Our delivery is ultra-fast, totally streamlined, and easier than the alternatives, so we succeed.

 

Segment Your Clients

Having more than one target demographic is okay. In fact, when handled properly, its a great way to expand your client base. The key here is to segment your clients, develop a specific strategy for each base, and disseminate it across all available channels.

Optimal segmentation requires you to understand your audience on a deep level. You need to know who these people are, how they live, and what is most important to them. Once your reach has expanded sufficiently, your focus should be on segmentation to maximize retention. Select individual segments to work on by metrics like user portraits, engagement, frequency of use, and revenue.

Of course, the segments that require the most attention are those that are at risk and hibernating.  The “at-risk” segment encompasses users who have spent time on your site but havent committed. “Hibernators” have committed a small amount of revenue or personal information, but they havent returned. These segments are on the fence, and it doesnt take much to tip them in one direction or another. These are the segments that should be the initial focus of your retention efforts.

For improved retention, you must understand how to streamline the customers journey from one step to the next. A challenge for us was eliminating the valley of death between the first and second orders. We did this by giving customers a small promo code across the first three orders rather than offering a single, larger discount on one order.

We also set up personalized push notifications that allowed us to communicate more effectively with different segments of our user base. The simplest example of this is personalizing their notifications and dashboard with their name. A more advanced example would be offering discounts or related items to consider based on their previous grocery purchases.
 

Take Care of Your Clients

Customer service has an overwhelming influence on retention rates. We covered this challenge by utilizing different metrics for each stage of an orders movement and set up chat alerts to monitor any deviations. We also closely tie our employees motivation to improving these metrics. We think about user performance first and foremost.

Remember that your product should always have a human face. A comment online about a bad customer service experience can cause your reputation to plummet and hurt your retention rates. To this end, we make it easy for users to find and connect with our customer support features, and we respond to complaints as quickly as we deliver groceries. Businesses can also benefit from adding personalized chat bots for fast and easy problem resolution.

A single positive review about how seamlessly a problem was solved can do more to boost your public profile and retention rates than a simple five-star review alone. It can be tricky to get customers to write reviews, so we try to make the process as easy as possible. Automated forms and follow-ups are an easy way to ask for feedback beyond a simple star rating, but businesses can also reach out on social media platforms to request reviews from users. The extra level of personalization is especially helpful for startups.

 

Introduce New Value

Your business should always be in the experimental stage when it comes to seeking out fresh market insights. Businesses should constantly look for ways to tighten up product and service offerings to provide more value. For example, we give customers options about how to utilize our grocery service. Our focus is on fast delivery, but we have options for in-person shopping and pickup too.

Another way we experimented with adding value was testing out offering higher-quality versions of products and seeking out local suppliers to partner with. We also found it helpful to schedule periodic promotions, sales, and giveaways to encourage repeat business and engage with market sectors we otherwise struggle to reach.

If you can incorporate these tips into your day-to-day operations, the result will be that you stay at the forefront of your customers minds. Youll see a noticeable uptick in organic, word-of-mouth traffic flow, and your retention rates will soar.

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