Want to know the secret behind making money in e-commerce? It’s getting your customers to buy more than once.
Customer loyalty, aka “customer retention”, is not talked about nearly enough. It might sound dull at first, but once you see it in action, you’ll love it.
Say it costs you $10 to get a new customer and $10 to fulfill their order. You make $25 in revenue from that customer. Great: You’ve made $5.
If that customer never comes back, you’re still in the black. But if they do come back, they’ll be three times as valuable to you. For that same $25 in revenue from their next order, you’ll only have to pay $10 for fulfillment. You’ll earn $15 in profit.
If they keep ordering, the value goes higher and higher. Over time – over the life of their relationship with you – they could end up begin worth far more than that one-time buyer.
This is why the smartest online retailers focus on a very important metric: Lifetime Value. The lifetime value of your customers influences your profitability, of course. But it creates other good effects:
- You can spend more to get each customer. Because you’re earning more from each customer, you can afford to spend more to get each customer. I.e. you can spend more than your competitors. That means you can squeeze them out, and compete for new customers more effectively than they can. That’s a game-changing advantage.
- You can afford to be nicer to your customers. This means you can offer benefits like easier returns, better service, cooler packaging or faster shipping. Or maybe even higher-quality products. The choice is up to you. All those things
- Make your company more noteworthy (word of mouth is still the most effective marketing channel around)
- Increase the loyalty of your existing customers. Further increasing their lifetime value and your profits.
This is why customer loyalty is so powerful. Fortunately, it’s not too hard to achieve, either. Here are thirteen easy ways to make your customers more likely to come back. None of them require a massive marketing budget or any unusually advanced technology.
1) Say “thank you”.
Could this be any easier? A recent study of people who stayed at a hotel conference center found that simply being told “thank you” created more feelings of appreciation than a small monetary gift.
While I like this study, I don’t think it completely negates the benefits of giving a financial gift. If anything, the key takeaway here might be to not insult your customers with whatever financial gift you give them. In this example, for hotel guests, the purchase amount was probably at least several hundred dollars. Giving five cents back on that does seem almost insulting. A financial “thank you” of 2-5% would have made the offer seem more sincere.
But never underestimate the value of simply saying thank you. It can be done in person, or via email, like Edmodo has done in this message:
2) Send a thank you note (or a postcard).
In a digital world, handwritten thank you notes stand out. They don’t even need to be particularly fancy to stand out. I’ve saved this postcard I got from Chewy.com for more than 3 years – it was that memorable. Even if they misspelled my name.
If you’ve got a young person hanging around the office, this might be a great way to keep them busy.
Of course, unless your business is tiny, it’s going to be hard to send out a separate thank you note for each order. So 80/20 it: Run a report of the top 20 or so biggest orders you’ve gotten in the last week. Send thank yous to just that list. It’s not everyone, but it’s a good start.
3) Show them how to use your products.
Too often, people buy something and then either don’t use it or don’t use it properly. In either situation, they probably won’t buy it again.
So help them along. Videos are great for product tutorials, but printed information sheets can help too. Don’t want to print out and manage information sheets for all your products? Consider making downloadable PDFs, then including URL to download them on the order form, or on a sticker attached to the packed product.
Birchbox has created hundreds of product how-to videos for their site. It’s working well enough that they plan to make more – many more.
4) Send re-order reminder emails.
Granted, this won’t work for every product. But for the products it can work with, reminder emails are a great way to generate more sales. The online pet store DrsFosterSmith.com has set up a reminder service to encourage their customers to sign up.
5) Offer great customer service.
There are more things to compete on than price. You can compete on quality, on service, and even on brand prestige. In fact, the worst thing to compete on is price.
For retailers, the next most common thing to compete on after price is service. This can take the shape of a 24/7 customer service line or chat service. Or maybe it’s a speedy response on social media.
You don’t necessarily have to invest tens of thousands of dollars into improving your customer service department. Just look for where it’s weakest, and improve that. Or just give people a good way to help themselves (which is what most millennials prefer anyway).
A few thousand dollars spent to create a truly useful FAQ or troubleshooting document can help a lot. Even if some customers don’t use it, the text is there for customer service staff to use for their answers, instead of them writing a new email every time someone has the same problem.
Alternatively, consider this: Which three questions or issues does your customer service staff deal with the most? What’s the best way shift your business so those issues are dealt with in advance?
6) Remove every possible hassle from ordering.
This is similar to the customer service improvements, but with a twist. Basically, what do your customers really want that they’re not getting? What do they wish they could have, but wouldn’t even think to ask for?
One example of this is Zappos’s “free shipping – each way” service. By removing the return shipping costs, they dramatically lowered the hassle-factor for their customers.
7) Send a welcome email.
It’s so incredibly easy to do, and yet most retailers still aren’t sending welcome emails. All it takes is a simple welcome message. Send it immediately after the subscriber has signed up for even better results.
Want some immediate sales from that welcome email? List your five best-selling products – with product images and descriptions.
Learn how welcome emails earn nearly ten times the revenue of regular promotional emails in our blog post, How 5 Online Retailers Get Results with Content Marketing.
8) Send re-engagement emails.
Re-engagement emails are typically used to re-activate email subscribers. So while they are definitely a customer loyalty tactic, they work to keep your customers listening to you, and that in turn keeps the channel for buying from you open.
These are extremely easy to send. Just run a report that gives you the email subscribers who haven’t opened or clicked an email in the last three months. Some marketers don’t send re-engagement emails until subscribers have been inactive for six months to a year, but that’s less effective. By then, many subscribers aren’t just disengaged; they’re totally lost.
You might also want to treat non-openers and non-clickers differently. This is especially true because so many email clients blur the measurements on who’s really opened an email or not.
9) Send cart abandonment or product browse emails.
I’m sure you’ve heard about the benefits of cart abandonment emails. And with shopping cart abandonment rates at 74.3%, we can use all the help we can get.
Here’s a good cart abandonment email – it’s got a nice big product image, a discount offer, and some friendly copy that asks if I had any problems ordering.
A twist on the shopping cart abandonment email is a “product browse” email – it’s just like a cart abandonment email, except the visitor doesn’t have to add the item to their cart to get an email. They only have to look at the product page.
10) Send a product review email.
As we’ve written about before, just one product review can increase sales by 10%. If that wasn’t incentive enough, getting people to leave feedback for their purchases is also a great way to make them feel that they’ve contributed. Psychologically, once we’ve contributed to something, we feel a bit more on the team. That’s an effective way to improve customer loyalty.
So start sending send out those product review emails. You might even consider offering your customers a discount or entry into a contest if they leave a review, like Moosejaw did here.
11) Send a product recommendation email.
Does your site recommend related products on each product page? Then you’ve got all the information you need to send this type of email. You just need a template to lay it out in, and the ability to send these personalized emails to your customers.
Generally, 3-6 recommended products works best. Include photographs of each product, too. And if those products have reviews… include their ratings as well.
You can also bundle this tactic into a confirmation email. That’s what Amazon does. It might well work better than sending a separate email, as transaction emails usually get the highest open rates of any kind of email.
I’ve noticed that Amazon changes the logic of their product recommendations from time to time. Sometimes, they recommend items the way they do above – by how closely related they are by subject. Other times, they use the “Customers Who Bought Items in Your Order Also Bought…” recommendation logic.
Other times it seems like there’s no logic used at all – at least not overtly. For example, when I bought the Kindle book “Hug Your Haters”, one of the products recommended was a “Trianium Atomic S Battery Case Charging Cable” – an item I’ve never looked at… though I did buy a charging cable about two months ago.
12) Ask for feedback and testimonials.
Most people won’t complain, even when things go wrong. But if you ask in the right way, they might tell you what didn’t go so well.
Of course, many companies ask their customers to fill out surveys these days. It’s getting on some customers’ nerves. So if you’re going to ask, make it worth their while – like 15% off one item in their next order.
Another way to get feedback is to ask for testimonials. These can be powerful conversion tools, and they also help to support an existing customers’ decision to buy from you again.
So ask for them. Then use them – on product pages, on your home page, on your customer service page, in emails, and in order confirmation emails. That’s a great way to reassure someone they’ve made the right choice by buying from you.
13) Flash sales for customers only.
This is another blended tactic – it works for both new customers that are email subscribers, and for existing customers. Of course, if you only wanted to send a flash sale to existing customers, you could do that, too. It might be an interesting experiment to send your flash sale email to people who haven’t ordered in a few months, just to see if a flash sale might re-activate them better than a standard re-engagement email.
There are other ways to improve customer loyalty – like adding a points program, or installing a wish list – but they didn’t fit into the category of “simple”. That doesn’t mean you shouldn’t do those things. But sometimes it’s easier to start with… easier tactics.
You’ve probably noticed that this list is a bit email heavy, but there’s good reason for that – email is the ultimate retention tool. It’s personal, timely, customizable and still wonderfully effective. There may come a time when email doesn’t work as well, but for now, it’s still a killer app.