10 strategies to increase customer retention for ecommerce brands

Did you know: If you increase your customer retention rate by 5%, you could increase profits by 25-95%?

That’s a lot of potential value. 🤑 But customer retention is no easy task. You’re constantly in competition with other brands. And customers expect you to maintain a high level of customer service and good brand ethics. 

If you’re currently struggling to convert first-time buyers into repeat customers, this guide will help you get there. You’ll find strategies and metrics you need to measure to maintain a good customer retention rate. 

What are the benefits of a customer retention strategy?

The goal of a customer retention strategy is to convert one-time buyers into repeat shoppers who consistently choose your store over your competitors. This, in turn, makes your business income more stable and predictable.

Here are some more reasons to invest in your customer retention strategy: 

• It’s cost effective: By focusing on customer retention, you’ll level out acquisition spend as it’s far more affordable to retain a customer than acquiring one. For example, if you spend $50 to acquire a new customer and $10 to retain an existing one, you save 80% on marketing costs while still driving repeat purchases. Obviously you’re not going to cut your acquisition strategies, so consider retention marketing as a way to add to your revenue stream. 💸
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• Enhanced word-of-mouth (WOM) marketing: Shoppers are more likely to buy from brands that have been recommended by people they trust. When your customers are spreading the word about your brand (whether through WOM or user-generated content) you’re likely to see an increase in new buyers. 
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• Existing customers spend more: Repeat customers spend 67% more than new customers. This means they’ll have a higher average order value (AOV) and continue to contribute to your brand’s profit. 

How to measure your customer retention rate

The average ecommerce customer retention rate is 38%. So if your customer retention rate is above that, you're already doing a good job. 🙌 If you’re not sure what your rate is, here are some simple calculations you can do:

1. Select the timeframe you want to measure, like a quarter or a month.
2. Find the number of customers you had at the beginning of the period.
3. Subtract the new number of customers you acquire (so you can focus on the number of customers who were with you from the start of the period).
4. Divide the remaining number by the total number of customers at the start, then multiply the answer by 100 to get the percentage value.

If you start with 500 customers, gain 100 new customers, and end with 450 customers, your customer retention rate will be:

• [(450 - 100)/500] x 100
• 70% (This is a good customer retention rate because it’s well above the average customer retention rate)

What is customer churn rate and lifetime value?

As well as retention rate, you need to understand customer churn rates and customer lifetime value (CLV). Here’s what these metrics mean: 

• Customer churn rate: This metric indicates the percentage of customers who stop doing business with you over a specific period. A high churn rate can signal underlying issues with customer satisfaction or product quality. By identifying and addressing these issues, you can develop strategies to retain customers and reduce churn.
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• Customer lifetime value (CLV): CLV measures the total revenue a customer generates over their entire relationship with your business. A higher CLV means that customers are staying longer and spending more. You can increase CLV through personalised marketing, excellent customer service, and loyalty programs.

Keep reading to learn how to improve these metrics in your customer retention strategy.

10 tested ways to increase customer retention (ecommerce edition)

Ready to increase customer retention? Here are 7 strategies to help you get more from your customers. ✨

1. Organise your tech stack 

First up, you’ll want to make sure you’ve got all the right tools in place to kick off your customer retention strategy. We’ll mention some tools as you go through the tips, but here are some extras that are a must-have if you want to make this a success. 

• Relo for turning one-time shoppers into subscribers: Take the guess work out of your customer retention strategy. Relo integrates with Shopify to analyse customer data and help you identify one-time buyers who might be ready to sign up as a long-term subscriber. Ben from Hairstory told us that Relo has been instrumental in helping them increase their repeat revenue. 
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• Dash for organising your visual content: Each of your customer retention channels will have one thing in common—visual content. That’s anything from product images, videos, logos, iconography and social media assets. When you’re managing all that content in tools like Google Drive and Dropbox, it can get overwhelming. Instead, use a digital asset management tool like Dash (that’s us👋). You can search, find, share and collaborate on all your brand’s marketing assets. You can also integrate with Shopify, WooCommerce, Klaviyo and Hootsuite to quickly drop assets into your customer retention campaigns.

2. Offer strategic referral incentives

Referral programs are one of the most effective customer retention strategies to strengthen your community and help your brand grow. 

These schemes make your customers feel connected to your brand so they’re more excited to tell others about it. Here are some ways to get referrals from customers.

• Create different referral tiers: Create a loyalty program based on tiers. For example, you could offer $10 for the first referral, $15 for the second one, and $25 for the third.
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• Give referrers access to exclusive products: Reward your referrers by offering access to exclusive products or early sales events.
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• Offer exclusive referral links to influencers: Work with influencers who share a similar audience with your brand, like beauty influencers for skincare products. Add a unique benefit to their links, like limited-time offers. 

💡 Check out article on creating an influencer marketing strategy. 

You can also automate the process of tracking and rewarding your customers, increasing customer retention with tools like Yotpo or ReferralCandy.

3. Gamify customer onboarding 

If you’ve not heard of the phrase before, ‘gamifying’ is the process of applying game-like elements to your marketing or sales process. For example, when a customer first signs up to your online store, you can build ‘levels’ that they need to complete in order to achieve a discount or VIP status. Here’s what we mean:

• Offer points and badges for purchases, reviews, or social shares: Gamifying these common actions encourages more engagement and repeat visits to your store. For example, if you offer voucher points for actions like leaving a review, you’ll give your customers an extra incentive to come back to your website.
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• Rewards customers for interacting with learning content: Similar to the idea above, you could offer points and rewards for customers who engage with your educational resources. Perhaps you could set up a sequence of actions that they need to complete like watching product tutorials, reading FAQs, or completing short quizzes. This approach helps customers become more familiar with your products and increases their likelihood to stay loyal.
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• Implement a tiered loyalty program: Use a loyalty program that segments customers into tiers based on their purchase frequency or spending. Offer points, special discounts, and rewards for each tier to encourage progression and engagement with your brand.
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• Add a progress bar on your website: With tools like Smile.io, you can include a dynamic progress bar showing customers how close they are to earning their next reward. This visual reminder motivates them to make additional purchases or engage more with your store. See the example below:

4. Create useful how-to guides and FAQs 

Customers want instant access to information without the need to contact your customer service team. When they can find answers quickly, it increases customer satisfaction and they’re more likely to purchase from you again. 

Here are some tips to try:

• Make guides visually engaging and user-friendly: Use step-by-step visuals, videos, and scenarios that show your products in action. This will make product education accessible for all different learning types. DTC brand, RevAir, has a web page dedicated to showing new customers how to set up their new hairdryer. 

• Use interactive quizzes to guide product discovery: Create quizzes that recommend specific products based on your customer responses. This will improve their shopping experience and add a touch of personalisation. Death Wish Coffee, for example, has a quiz that helps you pick which subscription is best for you.

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• Send product-specific guides based on past purchases: Follow up with post-purchase emails offering care tips, usage ideas, or advanced features. This is something the team at Hairstory does to help customers make the most of their new hair products. Matt, the brand’s Head of Lifecycle Marketing told us: 

“We want to provide our customers with a better-quality hair care solution. But to make sure they stick with us, we need to provide the best onboarding experience and get them to understand how to use the product properly. This way, they’ll have the motivation to keep coming back and to tell their friends about it.” 

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• Use newsletters to keep customers informed and engaged: With tools like Klaviyo or Beehiiv, send personalised emails with tailored guides, updates, and tutorials. This helps customers get the most out of their purchases at key moments in their journey.

5. Use SMS marketing 

SMS marketing has the potential to bring you a 45% click-through rate. And your customers are 81% likely to check their text notifications within just 5 minutes.

This makes it the perfect channel for your follow-up messages to lapsed customers. You could use it to re-engage people who haven't purchased in the past few months. Or let them know of time-sensitive offers, flash sales, and personalised incentives.

Here's are some SMS marketing ideas for you to try:

• Use SMS to nudge customers who have abandoned their online cart: You could even add images of the products they left behind to remind them what they’re missing out on. 
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• Send messages that create a sense of urgency: Messages like a 24-hour flash sale with a discount and other time-limited offers.
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• Promote sales ahead of time: Notify customers a few hours in advance about the sale. Once the sale begins, use language and phrases like "Hurry, ends in 3 hours" to create a faster purchase frequency.
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• Set up automated messages on special occasions: Offer customers discounts on their birthday or free gifts to celebrate the anniversary of your customer's first purchase. Tools like Yotpo can help you with this process. 

6. Add  shoppable links to your email campaigns 

Interactive emails have a 73% higher click-through rate than standard campaigns. Adding shoppable links makes it easy for customers to buy directly from their inbox, reducing steps in the purchase process and driving more sales.

Here’s how to make it work:

• Showcase your best sellers and personalised products: Use interactive product carousels to highlight top items based on customer purchase or browsing history. Keep these carousels mobile-friendly and quick to load for the best experience.
• Segment customers and send tailored recommendations: Use CRM data to create segments based on past purchases, and send product recommendations that fit each customer’s unique preferences.
• Create urgency with time-limited offers: Set countdowns for limited-time offers and add low-stock alerts. This pushes customers to act quickly. Take this email from Aura Bora, encouraging customers to grab a limited edition product before it sells out. 

• Add direct-to-cart links for each product: With tools like Klaviyo, add ‘add to cart’ links for each product image or CTA. Allow customers to choose options like size or colour straight from the email.

💡Marketers using our digital asset management tool, Dash, can connect with Klaviyo to easily drag and drop product images into their email campaigns. 

7. Combine hyper-personalisation with dynamic content 

When you send your prospects personalised content - like relevant offers and recommendations - your target audience is more likely to shop with you. 

You can use email marketing to combine hyper-personalisation with dynamic content. These two retention marketing strategies make sure your customers only see relevant content that adapts in real-time to their behaviour.

Do the following:

• Create dynamic segments based on shopping behaviour, like frequent buyers or high spenders.
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• Use real-time data to show stock availability in emails and on product pages. You can then send notifications to customers when items they view or add to their wishlist are about to sell out. This email by Riven also encourages customers to grab extra products so they don’t run out. 
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• Segment your customers based on location and send them offers that are relevant to their geographic area. For example, you can use local weather to promote products (like winter jackets when it snows).
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• Use Google Analytics 4 (GA4) or other customer data analytics tools to collect data on your existing customer base, like their previous purchases and browsing history, to tailor your recommendations. (Plus, if you’re finding GA4 too complicated to get your head around, use tools like Whatagraph for GA4 to help make sense of it). 

8. Simplify the checkout process 

26% of your customers will abandon their carts if you have a long, complicated checkout process.

So streamline the buyer's journey with automated account creation and one-click payment options. 

Here's how you can do this:

• Enable one-click payment options with systems like Apple Pay, Google Pay, or Shopify's one-click checkout feature to let your customers complete purchases with a single click. Plus, secure their transactions with SSL encryption and 2-factor authentication (2FA).
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• Set up email or SMS-based logins and send a magic link or code to customers who want to log in without passwords. Combine this with 2FA to improve customer retention rates with maximum security.
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• Offer guest checkout with saved payment options for faster future checkouts. Pre-fill details like saved payment and shipping details for returning customers to streamline the buying process.
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• Automatically create customer accounts with the provided details once your customers complete their initial purchase. Send login credentials post-purchase to encourage customers to access their accounts for future purchases.

9. Build trust through transparency and communication

Building trust with your customers is essential for long-term retention, and transparency and communication are key to achieving this. Here’s how you can build trust and foster loyalty:

• Provide clear information: Make sure your product descriptions, pricing, and policies are clear and easy to understand. Avoid hidden fees and be upfront about any potential issues.
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• Be transparent about business practices: Share information about your sourcing, manufacturing processes, and company values. Customers appreciate honesty and are more likely to support businesses that align with their values.
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• Respond promptly to inquiries: Address customer questions and concerns quickly and efficiently. Prompt responses show that you value their time and are committed to providing excellent customer service.
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• Provide regular updates: Keep customers informed about new products, services, and company news through newsletters, social media, and other channels. Regular communication helps build a relationship and keeps your brand top of mind.
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• Engage with customers on social media: Use social media to interact with customers, respond to their comments, and share user-generated content. This not only builds a sense of community but also shows that you value their input and feedback.

10. Partner with an agency 

If you don’t have the resources to kick off a customer retention strategy, consider working with an agency. For example, Elliot Digital is an email and SMS retention partner that will help you optimise your campaigns and increase revenue from repeat purchases. They specifically work with Klaviyo, a leading email and SMS marketing tool for DTC brands. 

How to  track your customer retention strategies

Once you’ve got some customer retention strategies in place, you’ll want to track them to make sure they’re performing well for your brand. Here are some metrics to track.

• Customer lifetime value (CLTV): This is the total amount of revenue you can expect from a customer during their entire relationship with your brand. A good CLTV is generally 3-5x higher than the cost of acquisition. You can increase this with cross-selling, upselling, and subscription strategies.
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• Average order value (AOV): This measures how much your customers spend on each purchase. A healthy AOV for ecommerce businesses ranges from $50 to $150, depending on your niche. Try bundling your products or offering incentives like free shipping for specific order values to increase this.
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• Purchase frequency: This tells you how often your customer base buys from you. A good PF is between 1.5 and 3 purchases/customer annually. You can increase this with personalised offers to segmented audiences.
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• Customer churn rate: This is the percentage of customers who stop purchasing from your store over a specific period. An acceptable churn rate should be less than 5%, while above 10% is concerning. You can reduce churn by focusing on specific points in the customer journey where your customers drop off.
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• Net promoter score: This measures how likely your customers are to recommend your brand to other customers. A good NPS score is generally above 50, while anything below 30 indicates room for improvement. Collect customer feedback to improve areas where customer complaints express dissatisfaction and boost your NPS.
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• Repeat purchase rate: This reflects how often your customers make additional purchases from your store after their first order. A solid repeat purchase rate is between 20-40%. Send targeted follow-ups and personalised recommendations with email marketing platforms to increase this.

Building your customer retention strategy 

If you don’t have the resources to implement all these customer retention strategies right now, that’s okay. Start with one and continue to build it over time. You can always come back to this guide as your ecommerce brand grows.

If you want to learn more about ways to grow your brand, check out some of these resources:

• How Hairstory boosted repeat purchases
• How MOJU Drinks increased ecommerce website conversions 
• How Coterie uses data to grow your brand ‍
• 18 proven ecommerce marketing strategies to grow your brand