A 5% increase in customer retention can boost your ecommerce profits by 25% to 95%. New customers matter, but your existing ones are nowhere near as valuable to your long-term success.

Our research reveals something interesting: 93% of consumers buy again from businesses that deliver excellent customer service. Customers who feel emotionally connected to brands show a 306% higher lifetime value. These numbers show why retention strategies are the foundations of sustainable growth.

This piece will show you proven ways to improve your ecommerce retention rates, which typically sit between 31% to 38%. You’ll learn how to turn one-time buyers into loyal customers who stick around, whether you need to reduce customer churn or enhance your current retention strategies.

What is customer retention in ecommerce?

Customer retention in ecommerce shows how well you keep customers coming back to buy more over time. The basic idea measures your success at building relationships with existing customers instead of just chasing new ones.

Your customer retention rate (CRR) shows this as a percentage. This vital metric reveals how many customers stick with your brand during a set time period. You can calculate this rate using:

[(E-N)/S] x 100 = CRR

Where:

• E = Total customers at the end of the period
• N = New customers acquired during the period
• S = Customers at the start of the period

The numbers speak for themselves. Hubspot has estimated that a very insignificant 5% increase in retention can result in an increase in revenues ranging from 25-95%. Repeat customers generate very significant value; they constitute only 21% of the average brand’s customer base, but they produce as much as 44% of those brands’ revenues.

What is a good customer retention rate for ecommerce?

Ecommerce retention rates change by a lot between different reports and studies. Most experts agree the average retention rate in ecommerce sits between 30-40%. Omniconvert puts it at 31%, Sprinklr sees about 38%, and Shopify’s 2023 data shows an average of 30%.

Compared to the rest of the industries, these figures seem quite less. The competitive nature of online selling gives credence to this claim. It becomes a challenge to keep customers loyal where a switch of brands can be made to compare prices and search for alternatives.

In spite of that, higher retention rates remain achievable. Some specialized ecommerce agencies report client retention rates of 62%. They credit this success to customized customer experiences and strong post-purchase support. The most ambitious targets aim for 85-90%, though that’s more of an ideal goal than industry standard.

Your target measure should match your specific market segment since rates vary by product type. To name just one example, clothing products average 26%, pet products 31%, and cosmetics 25.9%.

How to measure retention in e-commerce

Your retention efforts need the right metrics to measure success. Several key indicators will show how well you keep your customers engaged and coming back.

Customer retention rate (CRR) serves as the chief factor defining any other retention metric. The formula to calculate CRR is: [(Number of customers at the end of the period – New customers acquired during the period) ÷ Number of customers at the beginning of the period) × 100. Assume you start with 1,000 customers, acquire 500, and end with 750 – that would give a retention rate of 25%.

Your customer churn rate shows how many customers you lose in a given time period. The calculation is straightforward: (Lost customers ÷ Total customers at start) × 100. This metric gives you the flip side of your retention story.

Customer lifetime value (CLV) tells you what revenue you can expect from a customer’s entire relationship with you. Here’s how to figure it out: Average order amount × Purchases per year × Retention rate. Higher CLV numbers point to loyal customers and retention strategies that work.

The repeat purchase rate reveals the percentage of customers who buy more than once: (Number of return customers ÷ Total number of customers) × 100. E-commerce businesses find this metric valuable since it directly shows customer loyalty.

e-Commerce retention rate vs churn rate

Retention and churn rates are two sides of the same coin in the ecommerce world. A clear understanding of their relationship shows your business’s current position and future direction.

Retention rate shows the percentage of customers who stick with your business and shows their satisfaction and loyalty. Churn rate represents the percentage of customers who stop buying from you in a specific period. Your retention numbers point to success, while churn numbers reveal problems in your customer experience.

Good ecommerce businesses need clear standards. A solid retention rate usually falls between 20-30%. Some studies show retail and e-commerce industry averages near 63%. Different measurement methods and business models create this gap.

Your business should aim to keep retention higher than churn. This balance shows your customer satisfaction strategies work well. The numbers speak for themselves – a 5% increase in retention can boost profits by 25-95%.

5 ecommerce customer retention strategies to implement now

Successful ecommerce businesses need solid customer retention strategies that keep buyers coming back. Here are five proven tactics you can start using right away.

Personalize customer experiences

The bygone days of using a customer’s name are long gone. The modern shopper expects this in every visit to the store, and research indicates that such a feature (91%) will bring in more business for its employer. Specific experiences can be created for consumers through targeted product recommendations based on browsing history, personalized emails that mimic past purchases, and customized landing pages. Two-thirds of buyers now expect that brands know what they want.

Reward loyalty

A good loyalty program turns first-time shoppers into regular customers. Members spend 40% more on average than non-members. The best programs create emotional bonds with customers, not just point systems. Your program should include:

• Points-based systems where purchases earn redeemable rewards
• Tiered programs where customers unlock increasing benefits
• Community-based programs with exclusive access to events or groups

The numbers speak for themselves – 71% of consumers say they recommend brands that offer tailored experiences.

Deliver exceptional customer service

Great customer support keeps people coming back. About 65% of consumers spend more money with brands that let them chat seamlessly across different channels. Quick responses make customers happy. Even if you can’t solve a problem right away, let customers know you got their message. Clear timeframes help set the right expectations.

Use email marketing

Email remains one of the most economical ways to keep customers, bringing in about $42 for every dollar spent. Triggered emails get opened 95% more often than mass emails. Smart segmentation helps you send the right content to specific groups – from winning back old customers to suggesting products based on what they bought before.

Boost social media engagement

Social platforms give you amazing chances to build lasting relationships with customers. Your brand should respond to comments and showcase customer posts. This approach shows customers you care while displaying products in real situations. Creating online communities lets customers connect, share stories, and build stronger bonds with your brand.

Improve your ecommerce customer retention

Customer retention strategies need systematic execution and constant refinement. Your retention metrics can improve tomorrow by taking practical steps today.

Define your ideal customer before trying to retain everyone. Data reveals some surprising facts—to cite an instance, customers aged 60-plus show a 7.8% retention rate compared to just 3.5% for younger segments. Marketing efforts should target these higher-retention groups.

A unified tech stack becomes significant for retention success. According to Yotpo’s Moran Khoubian, “The most meaningful retention strategies are built on shared data between a brand’s tech stack, so your brand has a 360-degree view of every single customer“. This integration creates tailored experiences that boost loyalty.

Simple personalization can be enhanced with these practical retention boosters:

• Product-usage challenges help customers experience your product’s value. Oliver Charles cut their churn rate from 20% to 5% when customers used their product daily for a week.
• Dunning management works well for subscription businesses. Pet Joy found that 13% of monthly subscribers and 28% of yearly subscribers left due to payment failures rather than planned cancelations.
• Supporting meaningful causes that arrange with customer values makes a difference. Bill Glaser of Outstanding Foods notes, “Companies that advertise their social contributions often experience higher customer retention rates because customers know their shopping habits benefit others”.

Conclusion

Customer retention is the life-blood of ecommerce success. Data proves it significantly affects business growth and profitability. Our detailed analysis shows that winning retention strategies combine customized experiences, loyalty programs, and exceptional customer service.

The path to higher retention rates needs systematic measurement and consistent execution. Companies with the best results unify their customer data effectively. They deliver customized experiences and build strong post-purchase relationships. These businesses know that retention is an ongoing process rather than a one-time effort.

CampaignHQ provides powerful tools that boost your customer retention rates through automated personalization and targeted engagement strategies.

FAQ

Why customer retention is important in ecommerce?

Does your ecommerce business focus enough on keeping existing customers? Customer retention stimulates steady growth. Research shows that increasing customer retention by just 5% can boost company revenue by 25-95%. Your business spends 5-7 times more to acquire new customers than to retain existing ones.

Loyal customers do not only buy more often; they also spend more for every order. Returning customers are 60-70% likely to buy a new product versus just 5-20% for new customers. While making up only 21% of the average brand’s customer base, repeat customers contribute to a whopping 44% of all revenue.

Businesses with strong retention rates enjoy these benefits:

• Lower acquisition costs over time
• Higher customer lifetime value
• Steady revenue during slow acquisition periods
• Great word-of-mouth referrals from happy customers

How to improve your customer retention rate with CRO?

Conversion Rate Optimization (CRO) helps boost retention without cutting into profits through discounts. CRO creates exceptional shopping experiences that naturally bring customers back.

Your website data analysis reveals what stops customers from converting. This understanding helps you make targeted improvements.

These CRO strategies help improve retention:

• Simple checkout processes that reduce friction and abandonment
• Customized experiences based on customer data
• Fast website loading (slow sites drive visitors away)
• Clear product descriptions with compelling calls to action
• Trust builders like reviews and transparent policies