Ecommerce Retention Strategy - How to Maximize Customer Value

September 12, 2023
Customer Retention Strategies that Can Boost Sales for eCommerce

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Customer retention is a challenging topic and far more complex than many would like to admit. Crafting a strong ecommerce retention strategy involves a broad skill set, a critical understanding of customer preferences, and a deep analysis of your direct competitors. Powerful customer retention is highly sought-after in ecommerce with significant long-term benefits and a highly desired cumulative effect.

What is Customer Retention?

Customer retention is an ecommerce metric that measures the persuasiveness of your product and services. It also measures your ability to capture and generate repeat customers. And it evaluates how well your business does to relay trust, quality, and the user experience.

In terms of functionality: Application is essential. The tools that you use to manage, capture, and analyze customer retention figures can define your ecommerce retention strategy. Ask yourself what apps, tools, or features your business utilizes to meet customer retention goals.

Value for customers: Retention is inevitably tied to benefits for customers. This could imply a variety of things like customer service, product packaging, and delivery speeds. Customers make their decision to repeat purchases or become loyal based on merits. That leaves us to question, What are your brand's key strengths and how persuasive are they?

In a competitive environment: Substitutes in ecommerce are common and a business can be evaluated by its retention power. We will have to compare ourselves to the competition at some point. Consider how your best features compare with competitors and how well you encourage loyalty.

Customer retention has quickly become a focal point for countless businesses. It’s driven by the belief that customers are not meant to be just one-time interactions, but ongoing relationships. And that by fostering a relationship a business can maximize the value of each customer and create dedicated shoppers.

Retention Power

Retention power represents the degree of persuasiveness your product, service, and presentation have over the customers' decision-making. Here we need to look objectively at the values of your product and determine the correct way of capturing customers. Not all segments are the same, consider also factors that are unique to your product which can alter your ecommerce retention strategy. 

Ask yourself questions such as: 

Is my product something that customers can buy repeatedly? 

Is my product focused on social status or does it fulfill a basic need?

Does my price point exclude high repeat purchase rates?

What are the best tools to use in my niche?

Compounding Effect

A major advantage of ecommerce retention strategies is how customers accumulate over time and how they can be marketed efficiently using modern digital methods. Just like social media channels, a customer base can continue to expand with the right implementation of your ecommerce retention strategy. This is a concept very true to the scalability of the internet and is highly advantageous for a growing business, especially since retained customers have proven their intention to buy.

Diagram: effects of longterm customer retention

What are the main challenges of customer retention?

Ecommerce can be categorized into three main parts: lead generation, conversion, and retention.

Over the past few years, businesses have started to realize that efforts to generate leads have often resulted in poor conversion rates and were often very expensive to sustain. 

Since then, the focus has shifted towards improving presentation and most of all retention. Retention has recently been noted as being the greatest source of value for businesses, as a result, we’ve begun creating ways to improve retention and reengage customers.

Example one: A business has recently opened an ecommerce website and runs the most basic features while generating leads through PPC. While this may be a prevalent practice, their approach has several issues. 

  • Customers are expensive to generate as is the case with PPC, with a sharp cutoff if they stop as well.
  • They make no real effort to capture contact details, to re-engage customers, or to learn from them.
  • If their store data were to be observed we would find, low AOV, no customer database, missed opportunities, and poor return on investment.

While there may not be clear reasons to start investing in their operations at their current stage, there are clearly several pressing issues to resolve. Luckily, there is an ordered process that allows them to incrementally implement changes at a very low cost targeting the most important factors first.

Diagram: raising costs of customer acquisiton

Example two: A business recently started ecommerce operations and has made a conscious effort to maximize the value of visiting customers. It's possible to implement all the necessary steps at a low cost and automate a great deal of their functions. They focused on apps or tools to improve their functionality and incidentally made their business highly scalable.

  • They utilize several channels to acquire new customers and avoid being overly reliant on any one lead source.
  • They actively motivate customers to leave contact details and have built an automated outreach campaign to keep in touch with shoppers.
  • They actively track customer behavior and refine their marketing to match trends and customer preferences.
  • They established active customer support to remove possible pain points and carry customers until fulfillment.
  • They created a loyalty system that rewards customers who return to their store.
  • They cultivate trust by encouraging reviews, boosting their brand's reputation.

This example represents a business that actively attempts to capture willing customers to build a lasting relationship with them. They implemented several different methods that all aid in the retention of customers.

Why is customer retention so important in ecommerce?

Common digital marketing methods like PPC, SEO, and SMM all require investment or substantial time to prove their effectiveness. Whenever one of these channels successfully generates a potential customer, we expect that <3% of them will actually make a purchase and even fewer will repeat their purchase.

This means that you could be generating a hundred thousand impressions but only materializing a few hundred of them into purchases. While these figures may vary from industry to industry, the overall trend hovers around that 3% conversion rate.

Customers who have completed a purchase at your store have proven the “intent” to shop, making it worthwhile to communicate with them. With such a disparity in ecommerce, things only get worse if you ignore the important source of value. It also happens that when you work to improve your customer retention it also raises your entire ecommerce profile.

infographic demonstrating the important of customer retention

Building an ecommerce retention strategy

Ecommerce is a technical industry with a unique set of challenges. In order to build a successful retention strategy, you are required to focus on “implementation”. These are our recommended ecommerce retention strategies:

  • Contact Details: Fundamental to any ecommerce retention strategy is the ability to capture contact details for the purpose of promoting your product. Common methods include; applying quick login features, discounts for registration, exclusive features, or alternatively long-form registration for deeper customer profiles.
  • Database and Analytics: Just as you are required to capture contact details, it is also necessary that you preserve customer information. This means that at a minimum, you are tracking key interactions and have an idea of how to promote your brand to specific groups. Having a database deepens your understanding of your customers, and enables you to gather insights into their behavior.
  • Communication: The main objective of an ecommerce retention strategy is to derive the most possible value from repeat purchases. We are therefore required to establish reliable communication channels, which we will use to draw customers back to our store. By synthesizing your data into personalized profiles you are able to refine your communication by tailoring it to specific groups. It then becomes a challenge to find the best channels to use: branded websites, social media, SMS, and email are common and effective tools.
  • Discount and Rewards: Retention rates in ecommerce are often affected by the availability of substitutes. In a competitive environment, tools that allow you to implement discounts and other perk-based promotions can be highly persuasive. A few common practices include loyalty programs, email promotions, FOMO offers, free gifts, or free shipping. For many shoppers having a discount maybe enough incentive to make purchasing decision.
  • Product Viability: Essential to any successful ecommerce retention strategy is the product itself. Many will find it impossible to retain a customer if the product itself is unusable. Vice versa, it is dramatically easier to generate repeat purchases if the industry, product, and price are well balanced. To find that balance we need to ask important questions related to customer expectations, competition, and how successfully we found our dedicated customers.
  • Customer Support: There are countless ways a business may encounter issues along the customer's purchasing journey and newer businesses are especially susceptible to loss of sales. Pain points are a particularly troubling issue that could create strong negative emotions and reduce the chances of retaining customers. Customer support is a way of preemptively curing potential problems and helping form positive impressions for returning shoppers.
  • UX & UI: Branding or crafting opinions of your brand that appeal to shoppers is a universal goal. For the same reasons that businesses create product displays in storefronts, UX design is an excellent opportunity to create memorable impressions. On the contrary, a derelict presentation can have a strong and opposite effect which could lead to brand damage. Taking presentation seriously is a sign of growth in ecommerce.
  • Personalization: This practice involves the process of identifying customer preferences and targeting them with custom promotions. The opposite would be random suggestions and out-of-context promotions, which would have little chance of conversion. The act of personalization is inherently a service that is categorized as a method of optimization. The belief is that knowing what a customer likes. the more effective your retention strategy will be.
  • Subscription Services: Subscription services are a very clear example of a retention-orientated business. They are based on recurring purchases which is in essence what customer retention strategies are all about. The only drawback is that they cannot work for every business as the product may be misaligned with their function. 

These e-commerce retention strategies represent important points of focus for any online business. They are what we consider necessary to carry out a retention strategy. While the topic of customer retention can be rather broad, the tools that you use make it possible to extract the most possible value from customers.


Ecommerce retention strategies are designed to derive the most possible value from customers and are important goals for growing brands. They work by focusing your online store towards capturing leads, databasing them, and implementing re-engagement campaigns. They are measured through common KPIs like AOV, Lifetime Value, and Retention Rate. They are important because of how much value is lost daily due to poor retention efforts. This article should give you enough of an understanding to confidently craft your own ecommerce retention strategy and maximize the value from each one of your customers.

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