January is the perfect time to define how you’ll measure overall ecommerce success. For 2023, it should be the customer retention rate.
By focusing on the CRR, you can scratch off menial timewasters and tackle a core success driver.
Retention Is Key
Increasing the number of repeat customers is the best way to boost profit and catapult brand awareness.
According to Omniconvert, a conversion platform, the average CRR for ecommerce is about 30%. To calculate yours for 2022, take the number of customers who consummated a transaction during the year (T) and subtract first-time buyers (F). Then divide that sum by the total number of historical customers at the beginning of the year (B).
T — Total buyers in 2022
F — First-time buyers
B — Total customers at the beginning of 2022
[(T-F) / B] x 100
Say 5,000 customers consummated a transaction in 2022, and 2,000 were new. You started 2022 with 9,000 total historical customers.
[(5,000 – 2,000) / 9,000] x 100 = 33.3%
In this example, the baseline is 33.3% — the number to beat in 2023.
Increase the CRR
Depending on the study, repeat customers spend upwards of 67% more per purchase and can account for 50% or more of total sales. Thus ensure your sales goals focus on CRR. This may require adjusting advertising budgets and flash sales to programs that engage with and reward loyal customers.
Consider these options:
- Targeted email and SMS marketing. Special VIP communications can make a difference, especially with personalized content based on a customer’s interests and order frequency.
- Early access to new products and services. Reserved inventories and first come, first serve offers can create fear of missing out.
- Exclusive access to select items. Unique accessories or limited editions of popular products can be enough to entice customers to return.
- Legacy pricing to long-time customers.
- Priority support and dedicated contact info eliminate frustration by giving your best customers a way to skip the line. Delta Airlines does this exceptionally well, offering its SkyMiles members a dedicated phone number with a callback option.
- Customer spotlights such as articles, social media posts, and videos.
- Beta testing opportunities to invite customers to share what they think.
- Third-party limited offerings. Consider partnering with other brands to offer loyal consumers free or discounted products.
- Exclusive contests and challenges. These can be simple or elaborate. Launching a simple social media campaign with dedicated hashtags will direct more eyes toward your brand.
The list goes on, but the goal is to ensure customers know they are appreciated.
Trends influence purchases. Regularly analyze what’s happening — especially on social media — and determine how it relates to your customers’ needs and desires. Doing so helps leverage relevant content and identify untapped audiences.
In the weeks following Netflix’s Tiger King premiere, sales of tiger-related apparel, toys, and accessories jumped 56%. FAO Schwarz reported that sales of stuffed tigers had tripled.
Reduce the Churn
Efforts to increase the CRR should also help reduce the number of customers who leave. Opposite of the retention rate, the customer churn rate is the percentage of purchasers you’ve lost.
If you’re not focusing on the CRR, chances are you’ll see increased churn. The reasons customers leave are rarely the opposite of why they stay, but they almost always fall under the “I’m not valued” umbrella. Pay attention to account inactivity and bounce rates so you can market accordingly.