Retaining Customers

Retaining customers in ecommerce: The Superstar Product Technique

If you don’t plan on working on retaining customers today, you’re losing money. Every customer you fail to keep has to be compensated for with 5 new acquired (in the US, or 7 in Europe).

The same report claims that about 40% of revenue for US online stores comes from repeat customers, although they make up only around 8% of the traffic.

While customer acquisition is vital in the initial stage, it turns into a rat race if it’s the main source of business. We like to compare aggressive acquisition to dating where you have to always impress someone new as opposed to being in a long-term relationship where care keeps the fire up.

Wherever you look for advice on retention, you see remarketing, extraordinary customer service, reactivating emails and the rest of the usual suspects.

However, we know you need shortcuts too. Even with a long-term strategy in place, small tricks along the way can speed things up. Tricks that are a little bolder.

That’s why we put together the Superstar Product Technique for retaining customers.

In 3 simple steps, you can transform your existing customers’ behavior, hooking them up stronger than before. As they say from Marketing Wizdom, “The easiest way to grow your customers is not to lose them.”

And the best part is it can be done in a day!

Step 1

Evaluate how well you’re doing retention now

Galaxy Holding TogetherIt’s check-up time. Before you plunge into any action, you have to audit your current state and efforts.

Benchmark yourself: Customer retention report for DTC brands

To evaluate your current retention efforts, take into account the following 5 metrics:

Repeat rate by product

It’s your analytics platform’s time to shine. You’d want to see how different products perform in terms of inspiring people to come back to your store and buy more (of the same product or something else  – it doesn’t matter).

This usually happens when a product truly makes them happy and this positive experience transfers as trust to the whole brand (and store).

What you should be looking for with this metric is product(s), doing outstandingly well at making customers loyal.

Share of returning customers

What portion of your customers buy more than once? Naturally, if one-timers heavily outweigh repeat customers, you have a problem.

The most probable causes are poor customer service and product quality. And it forces you to go out again and acquire new customers.

Time between orders

Of course, product lifecycle plays a huge part – furniture is not shopped for as often as food and cosmetics.  If you’re about to shift focus to driving repeat business, you’d better have realistic expectations about how often people really can shop for your products.

Otherwise, your actions and the success of this technique might be poorly timed. You can download our free calculator to see how often your repeat customers pace their shopping.Target

Average number of orders per customer

People coming back to your store is great, but how many times? Two orders on average still don’t mean you have proper retention. Truly loyal customers come to you every time they need a product like yours.

That’s why we can’t stop advocating monitoring customer sessions and website interactions even when they’re not adding anything to cart.  “Just browsing” indicates general interest and can be monetized – apparently, your offers are not unwanted. 

Customer Lifetime Value (CLV)

How much do you earn from a customer on average throughout their lifecycle with you? A one-time customer is not likely to spend as much as a returning customer over 2 years, right?

Given that acquisition costs eat up your profit, the most sustainable path to a business with a healthy cash flow is focusing on retention and maximizing the gain from customers you already paid for.

Improved retention will also help you gradually bump up the CLV further by upselling because return customers trust you and are willing to spend more. 

How to evaluate your Retention Rate?

Generally, for established online stores, the above-mentioned metrics should look something like this:

  • there should be a few products, better at driving loyalty than the rest;
  • the returning customers should be slightly more than the new (you still need new to make up for any churners and grow);
  • time between orders is reasonable given the products’ nature (also, check if they buy on incentives like coupons);
  • average number of orders per customer is healthy (again, it depends on the type of product, be realistic);
  • CLV is leaving you a good profit after acquisition cost has been accounted for.

If you’re not making conscious efforts in that direction, you’ll notice problems with some of these. Our technique here aims at optimizing the overall Retention Rate by pushing the products that have proved to work best at creating returning customers.

While you can be working on all metrics in the long term, that quick fix will improve all of them as a side effect.

Step 2

Identify your Superstar product that boosts retention

Andromeda Galaxy

Let’s dive deeper into the basics of trade. People shop for products (tangible or intangible) and more specifically, the experience these products provide. So no matter how good your UX and customer service are, if they don’t like the product and experience tied to it, you stand no chance.

Then turn that into your advantage!

This method relies on products that have already proven in keeping people hooked. The trick is to do the same with more of your customers because obviously those products make many people happy. After all, your target audience shares tastes and needs.

Don’t look further for ways to boost retention than your products. Identify the few ones that drive the highest retention rate.

How to do it?

  1. Look for products that drive repeat purchases – people are so happy with that product that they become loyal to your store and come back to shop frequently.
  2. Then, spend some time with their order histories and find out when they discovered that particular item – first time browsing, first order, or some time after becoming a customer? (Metrilo can do all that for you.)

Don’t get fooled…

You might be surprised which products drive the highest retention for your business – usually, they aren’t the best-selling by revenue or volume.

You cannot rely on the most expensive items since they’re unaffordable for the bulk of your audience. The same way, high-volume items often are lower quality or good deals that don’t inspire lasting loyalty.

Constellation3. After you’ve identified your superstars that keep people coming back to you, answer the following questions:

  • Is that your main product – heavily visualized throughout, keyword-related, brand-named? If so, you might be spreading too thin over unnecessary complementary products that won’t make people come back. 
  • Is it better-priced than competitors’? Is it your best value for money?
  • Is it great quality? Are there really positive reviews of this particular product? 
  • Then look away from your site – is there abundant info on how to use it (apparently, all recipes feature avocado now) or a celebrity has emerged always wearing similar comic book heroes socks to the ones you make? All those can be reasons people are going crazy over particular items.

There’s something special about it that makes all those people so happy that they continue shopping from your store. It’s not a weapon until you understand what makes it so powerful.

Then you’ll know how to sell it to others as well and get more loyal customers coming back.

Step 3

The Superstar Product offer

Solar System

So, the Superstar Product Technique banks on a product that for some reason makes people happier than your other listings, putting in front of everybody who hasn’t tried it and letting it work its magic.

Now, it’s time for the campaign itself.

Of course, you’ll be selling the same product to everyone, but tactics should be tailor-made for different segments. If you’re pushing something new for them, at least do it in their comfort zone.

A few ways to reach different audiences for a better response are:

  • Segment by acquisition channels and release channel-exclusive offers in different periods.
  • Focus your content marketing on the superstar product to raise awareness.
  • Look at spending habits. You can send coupons to the deal-hunters (the ones that heavily use coupons), but save it and use a video tutorial (featuring the product) in an email for the better-spending customers.
  • Add a sample of the Superstar to the highest spenders’ next order – to try out and get hooked up.
  • Do you see people who shop only one category? Try to tie the Superstar Product to something in that category – with content or simply a product bundle offer.
  • A bonus idea: segment by location and offer limited edition packaged Superstar for a regional holiday.

In all campaign variations, make sure to ask for feedback after they’ve had enough time to try the product. And don’t stop measuring the retention rate of the Superstar.

Let’s see

how the Superstar Product technique would impact the retention metrics

we talked about in the beginning.Super Nova Star

Share of returning customers. If possible, keep a tab on the customers who take the bait and give the Superstar a try.

How does their shopping behavior change after? And do they join the Superstar fan club?

Time between orders. This one probably won’t be affected much especially if the product is not hugely dissimilar in use from the rest.

I mean, if they used to shop for shampoo and lotion once a month, the bath salt won’t go much faster to cut the time between orders in half.

Average number of orders per customer. We expect the Superstar Product Technique to turn somewhat active customers into loyal regulars. If other products weren’t able to make them fall in love and come back often, this one should.

Customer Lifetime Value (CLV). The end goal. With increased customer retention, you’ll optimize acquisition costs and enjoy loving long-lasting relationships with your customers. As the Harvard Business School found out, a 5% increase in retention rate leads to a 25% -95% increase in profits.

Are you doing customer retention right now?

Keeping customers is actually easier than acquiring new ones. You already know so much about those people – what they shop for, how much they spend, where they live and what colors they prefer.

Can you seriously let that gold mine go unused and chase after people you know nothing about? As Grandma would say, “A bird in the hand is worth two in the bush.” Or, 5 as mentioned earlier.

The Superstar Product Technique is a quick fix for retention when you’re out of specials, new products or creative ideas. In the long term, it’s a good indicator how you can improve your other products to match that retention rate so your online store becomes bulletproof and all your products inspire brand loyalty.

What other retention tactics do you use? How are they working for you? Share your ups and downs with us in a comment below!


About the author

With experience in FMCG and marketing, Dimira writes to help the brands of tomorrow succeed and believes passion is a key ingredient in any business.

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