Losing customers is comparable to a sinking ship – it’s the decline of any e-commerce company.

Low retention and high churn rates are intrinsically detrimental to company growth and become increasingly hard to salvage. Just imagine if customers are going out your back door quicker than they are coming in.

In today’s commercial market, consumers have more opportunities than ever to take their business elsewhere. If your company lets customers down or provides a subpar experience, all you’re doing is pushing customers towards your competition.

Brands need to go the extra mile to keep customers loyal, who will ultimately end up buying more from you in return. The most satisfied customers are also a great source of marketing as they refer their favourite brands to friends and family, further increasing your customer base and subsequent retention rates. It’s the start of a cycle – but how does it work?

The ever beneficial cycle of customer retention Loyalty. It’s a sought after quality in life that is irreplaceable, and its benefits in e-commerce are there for all to see. Loyal customers buy more often, spend more and are much more inclined to make further purchases if companies are paying attention to what brands or types of products they have taken a liking to. Even a 5% increase in customer retention can increase revenue by 25%-95% .

And it creates a knock-on cycle of retention benefits. The longer you can keep customers interested, the more data insight you’ll accrue. As a result, the better you can learn from their shopping habits and cater services directly to their needs. This is all crucial for developing effective strategies to enhance retention.

If the experience is good, it will spark referrals, increasing the customer base and chance for further retention. With loyalty also comes less price sensitivity. If you’re delivering brilliant service, trust and products that enhance people’s lives, customers will appreciate the value for money on offer and are more likely to accept higher rates.

With customers this engaged, they are much more likely to have a longer lifetime value (LV). The financial benefits of this are twofold. Firstly, businesses can expect the majority of their sales to be generated by about a fifth of their customer base. Secondly, loyalty breeds familiarity. Customers know your products and services, so marketing doesn’t need to expend vast amounts generating awareness and advertising what’s on offer. It’s a win win.

Boosting customer loyalty with customer data platforms ​

But what’s the most effective way of boosting retention with customers? As showcased above, the most powerful way to earn this badge of loyalty is to focus efforts on enhancing customer experience and, therefore, customer engagement and, consequently, customer retention. Fail to deliver on this, and consumers may go looking elsewhere. But for this to work, you need data, omnichannel communication and the ability to track vital engagement metrics.

It’s possible to collect data without a customer data platform (CDP). But this is a clunky, disjointed process involving a range of different tools, data loss and lack of coherency. A daunting proposition. There are much more advanced next generation CDPs, powered by AI and machine learning, that are able to drastically improve the whole process.

These platforms can create a holistic, streamlined process that is able to automatically gather all of the data needed to monitor for crucial engagement metrics. This data can be collected from all channels and collated in one central system to form a unified customer profile – a single source of truth – accessible across the company.

Through this data, brands can gather key engagement metrics, both broadly and individually, and use this insight to deliver on customer engagement vision, strategy and action. Prioritising customer retention becomes intrinsic to the brand’s e-commerce process.

Stamping out customer churn with lean marketing

So far we’ve painted the idealistic picture of why customer retention is crucial for keeping business afloat. But this process falls into the wider realm of lean marketing and it’s this process that provides the foundations for rooting out customer churn. In short, it’s streamlining the whole marketing process, cleaning up entire communication channels and removing any activities that don’t bring direct value to that target customer.

If the whole e-commerce business is tailored in this efficient and sustainable structure, then it can create hyper-personalised campaigns and content that drive customer retention and stamp out churn. CDPs provide the means, data and tools to achieve this process – brands then need to incorporate this into wider business strategy and make sure teams are all singing off the same hymn sheet.

The more value delivered to the customer, the greater the retention rates.

Full steam ahead

Failing to retain customers can have exponentially detrimental effects. Trying to increase sales and lead generation results to combat the growing exodus out the back door is the most unsustainable and expensive answer. It’s pumping water out slower than it’s pouring into your ship, simply delaying the inevitable. There’s no way a company can grow in such circumstances.

Instead, brands need to focus their energies on customer retention, understanding its benefits and employing strategies to boost loyalty. Customer data platforms can unlock this process, providing a range of tools and data to boost customer experience, engagement and retention. By adopting a lean marketing mindset, companies can redefine how they approach dealing with customer ​retention and churn. Rather than abandoning ship, you’re loading up your cargo and sailing full
steam ahead.