How to keep customers? Or what is retention for ecommerce

During the launch and active operation of a company, significant investments are made in marketing. To balance these costs and achieve profitability, we implement customer retention.

To better understand, let’s consider the example of a sales funnel, where we find ourselves when talking about customer retention.

Fig. 1 – Sales Funnel

Looking at the chart, “retention” of consumers is located within the purchase and loyalty stages. We actively work with customers, and thus we can influence the consumer during their first purchase and engage them for long-term interaction (loyalty programs, referral programs, etc.).

What channels of interaction with the audience exist? The main ones include:

• Social media;
• Email newsletters;
• SMS;
• Push notifications (on the website/in apps);
• And more.

In general, we have discussed what customer retention is. Now let’s go through each component in more detail.

First of all, it is necessary to clearly define who our customer is. In theoretical literature, consumer segmentation is usually based on gender, age, income level, and geographical location. While this is correct, it is not enough to fully capture and reveal the character of the consumer, as their attitudes, desires, and behaviors can change under the influence of various factors. This can be greatly assisted by:

• monitoring and studying customer feedback about the product;
• active collaboration with the technical support department, as they know best what is happening, what problems arise, and what recommendations come from consumers;
• if the company has apps, checking reviews on the App Store/Google Play;
• conducting surveys regarding service and the product itself;
• research – analytics, changes in metrics before and after launching advertising, what the reaction was, what impression we make, whether their opinion about the company has changed, etc.

After forming consumer profiles, hypotheses are developed. For example, in which cases and under what circumstances our offer will be beneficial for a particular segment, how to present it better, and improve it according to consumer needs.

You may ask, what is all this for? 

The main task for a company is to appear at the right time and place with a relevant offer that can best solve the consumer’s problem.  

Once we clearly identify who our clients are, we can move on to forming and developing the client base. 

What exactly is a client base and how can it be obtained, even if the client has not made a purchase yet?

In short, this process is called “lead generation.” A very vivid and illustrative example is the work of AliExpress. As soon as we open the site, we are greeted by a huge number of pop-up windows. 

Fig. 2 – Photo of the main page of the Aliexpress website

Such methods include: subscribing to web push (notifications that pop up in the browser, even if you are on another site), pop-ups (when we are offered various attractive deals, such as bonuses, discounts for leaving an email or registering on the site, etc.), and so on. These are the main ways to collect information from the site and form a database. That is, we configure the company’s website in such a way as to obtain as many registrations as possible.  

After a person leaves their phone number or email, automated funnel sending begins, and communication is initiated across all interaction channels. 

There are automatic and promotional communications. Automatic refers to a system that is set up once, tracks KPIs, and is sent automatically to each user. Promotional marketing is when we manually communicate with the audience. 

Below, you can learn how the work and interaction with new and existing clients occurs, those who are just starting their journey and those who do not purchase products. 

Fig. 3 – Interaction with clients at different stages

Therefore, it is important for us to develop the users present in our database. We lead them from the first contact to making a purchase and subsequently to repeat purchases. And to achieve this, it is necessary to constantly work and improve. 

Let’s talk a little about working with “new” users.

• When a user first visits the site. We set up a welcome mailing, telling: who we are, what our values are; we provide bonuses, coupons, doing everything to ensure the first purchase is made. 
• Engaging “abandoned view” – when a person viewed something on the site but did not buy anything. We remind them that the user was interested in the products and it might be better to buy them right here and now. 
• “Abandoned cart.” A similar scheme to the previous one, while we can offer some enticing discounts. 
• A situation where a purchase has already been made and we remind them of ourselves. This works when the buyer has added some product to favorites. We then send messages regarding promotional offers on those products. 

Users who have already made their first order, and we want them to definitely make a repeat purchase. So, for this, we can:

• Engage them in a referral program, providing some perks for orders and attracting new clients (friends, acquaintances, family).
• If the site/app requested a birth date, companies can congratulate users and provide gift bonuses (points, free shipping, coupons, etc.).

Users who purchase regularly. Our task is to increase the average check and purchase frequency while retaining them from switching to competitors. We can offer personalized discounts, various interesting offers, etc. 

People who have started gradually distancing themselves from interaction with us. At this stage, we should remind them of ourselves, analyzing what the person previously viewed/purchased, providing the most relevant information on what will interest them, thus preventing them from completely leaving us. 

How can we understand which channels are best for maintaining contact with the user? 

The answer is simple, we look at which channels the user most frequently used to place orders. 

Promotional Mechanics

Currently, the main promotional mechanics include: product promotions, brand promotions, category promotions, “quick” promotions, and “crazy” promotions.

Product promotions. When the promotion is aimed at a specific product.

Brand promotions. This is a promotion that applies to a specific brand. 

Category promotions. Works within the selected category, for example, only on smartphones or burgers, etc. 

“Quick” promotions. The name speaks for itself, meaning the promotion lasts for a certain number of hours. In most cases, this is 3 or 24 hours. 

“Crazy” promotions. Such promotions can include: the company’s birthday, New Year, Black Friday, etc. 

Promotional offers also have a life cycle. 

Fig. 4 – Life Cycle of Promotions

• The first stage is “pre-sale.” For example, before the launch of a new phone model, a user can submit an application to participate in this promotion and be one of the first to receive the new phone. Or there may be some events. At this stage, we generate interest and explain why it is worth joining.  
• When the promotion starts, we announce it. 
• During the promotion, we share interesting offers.
• The last day of the promotion. We remind about it and encourage not to miss the opportunity to get cool products, while offering some bonuses. 
• After it ends, we analyze the data obtained, determining whether the set goals were achieved, which channels worked best, etc. 

In summary, if you want to attract the customer’s attention and sway them to your side, the idea itself and regular notifications will not be enough. It is necessary to maintain constant communication with customers. You should systematically remind them of your presence, provide personalized offers, and engage them in interaction.  

To dive deeper into the topic, you have the opportunity to familiarize yourself with the report in video format with answers to questions.