Great marketing helps you reach online shoppers, and a well-designed purchase experience helps convert them. But what happens next? How can you convince first-time buyers to become repeat customers? It starts with understanding customer retention and loyalty.
Customer Retention vs. Customer Loyalty
Customer retention is a measurement of how many customers continue purchasing your products over time. Customer loyalty relates to the way consumers feel about a brand, including their preference for the brand and level of engagement with it.
Measuring retention is fairly simple because things are black and white; either a customer makes purchases during a set time frame, or they don’t. Loyalty, on the other hand, is a spectrum. A shopper could be extremely loyal, not loyal at all, or anywhere in between.
While the concepts of retention and loyalty are different, they’re closely intertwined. Loyalty helps determine retention, as loyal customers—those who engage most with the business—are generally more willing to continue making purchases. On the other hand, when loyalty isn’t strong, customers could lose interest or be enticed away by a competitor.
Although retention is more transaction-focused and loyalty is more emotional, both are important for ecommerce businesses.
What Is Customer Retention?
Customer retention is a business’s ability to keep its customers coming back and making purchases over time. Many factors influence customer retention in ecommerce, and understanding these elements is the first step toward improving your retention.
- Product quality. For many consumers, product quality is the most important consideration. If a product doesn’t look or work as expected, people likely won’t buy from a business again.
- Pricing and promotions. Pricing is another crucial factor when it comes to retention. To attract and retain customers, merchants need to price products appropriately.
- Trust and security. Ensuring secure transactions and protecting customer data builds trust, which is essential for retaining customers in an online environment.
- Post-purchase experience. Providing excellent after-sales support, including easy returns, helps reinforce a positive perception of ecommerce stores.
Learning what your specific customers care about is key to long-term retention. For example, if your target audience is most concerned with their environmental impact, your brand’s stance on sustainability could factor heavily in retention. On the other hand, if your most frequent shoppers are concerned with pricing above all, that should guide your strategy.
What Is Customer Loyalty?
Customer loyalty is when customers are committed to a particular brand. Loyalty is often shown through repeat purchases and positive word-of-mouth.
Let’s review a few factors that contribute to building and maintaining customer loyalty.
- Brand trust. Customers are more likely to return and recommend a brand to others when they trust in its reliability, product quality, and integrity.
- Emotional connection. Building a strong emotional connection through engaging storytelling, relatable brand values, and personalized interactions can lead to deeper, more enduring loyalty.
- Customer engagement. Actively engaging with customers through social media, email, and loyalty programs can strengthen their connection to your business.
- Rewards programs. Loyalty or rewards programs that offer incentives such as discounts, exclusive access, or points for purchases can motivate customers to stay loyal.
The Importance of Customer Loyalty and Retention
Customer loyalty and retention are important because they lead to increased profitability and sustainable growth.
Loyal customers not only provide a steady revenue stream through repeat purchases but also tend to have a higher lifetime value. Retaining existing customers is often more cost-effective than acquiring new ones because it requires less investment in marketing and outreach.
Satisfied and loyal customers can become brand advocates, spreading positive word-of-mouth and attracting new customers through referrals. This improves a brand's reputation and strengthens its position in the market, ultimately leading to long-term success.
7 Ways To Improve Customer Retention and Loyalty
Customer retention and loyalty hinge on the customer experience, especially what happens after purchase. The seven strategies below will help you create an engaging experience that convinces customers to stay loyal to your brand and continue making purchases.
1. Build Relationships Through Regular Communication.
Building relationships with customers is a simple but powerful way to keep them engaged with your business. While you have many options for building relationships (many of which are discussed in the following sections), we’ll start with communication.
Your email list is one of the most valuable tools you have for promoting customer loyalty and retention. Once someone signs up, you can send them personalized messages that keep them interested in your business.
Messages can be triggered by events; for example, when a customer makes a purchase, you can send an order confirmation email, followed by a shipping update. Once they’ve received their product and had time to use it, you could send an email asking for feedback.
Other types of communication can include personalized offers or recommendations, information about sales, and educational content about how to use products.
2. Engage on Social Media
Engaging with current and potential customers on social media is a great way to build loyalty. No matter which platforms you use—Instagram, Facebook, TikTok, or others—make sure to let your brand voice shine through. If your content is unique, authentic, and relatable, people will be much more interested in following along.
Not sure what to post on social media? You have plenty of options! If you have upcoming promotions, tell your customers about them. Showcase your products, especially new ones, with videos or detailed photos. For bonus points, make informational content that relates to the products you sell. For instance, if you sell yoga mats, you might create a short video walking users through a few yoga poses. Many brands boost engagement by holding giveaways; users can like, follow, leave a comment, or use a certain hashtag to be entered.
While organic social media is a powerful tool, you can also embrace paid strategies such as ads, influencer marketing, and brand partnerships.
3. Ask for Feedback
To build retention and loyalty, ask for feedback regularly. When customers feel like their voice is heard, they’re more likely to stick with your business.
You can ask for feedback using several channels. Emails and texts are some of the most convenient ways to connect with customers, but you can also allow them to leave feedback through a portal on your website or even on social media.
When you send requests for feedback, remember to make things as easy as possible for customers. While open-ended questions are ok in some situations, you should also provide quick feedback options such as yes-no questions and rating scales. Many businesses use emojis to make things even more intuitive for customers, letting them choose the emotion that best represents their feelings.
In addition to asking for general feedback, you can also get specific. Consider asking about product quality, shipping, customer support interactions, and the overall purchase experience.
4. Provide a Great Delivery Experience
Fast, affordable, reliable shipping plays a major role in the post-purchase experience, so it’s important to get things right.
A great delivery experience starts on the checkout page. To cater to various customers’ needs and budgets, provide a variety of shipping options: standard, expedited, and express. Keep costs as low as possible by negotiating rates with carriers or using shipping software to get discounts.
Reliable carriers are more likely to deliver packages without damage or delays. But no matter how reliable carriers are, packages could still run into trouble if your fulfillment processes are unorganized. Optimizing order fulfillment activities like picking, packing, and inventory management will help you ship orders out on time. Packaging products securely, with right-sized boxes and appropriate infill material, will help prevent damage.
For high-value or fragile products, most businesses take extra precautions by offering shipping insurance.
For example, Norton Shopping Guarantee with Package Protection by EasyPost allows customers to purchase package protection at checkout for a small portion of the product price. If the package is lost, damaged, or stolen, the Norton Shopping Guarantee team handles the claims experience and pays out reimbursements.
Package protection helps increase cart conversions and gives customers peace of mind during the delivery experience.
5. Show Appreciation
Showing appreciation goes a long way toward fostering customer appreciation and loyalty. This doesn’t require elaborate efforts—even simple signs of appreciation motivate customers to continue buying from your business.
One easy way to show appreciation is to feature customers on your social media. This strategy works great for products that require creativity. For example, a natural foods brand might showcase a customer’s home-cooked meal that was made with their ingredients.
Emails are another great opportunity to show customers you care. You might send thank-you emails after a purchase, or, to go the extra mile, you could send an email on the customer’s birthday with a discount code.
Customer appreciation can also work on a larger scale. Consider establishing a customer appreciation day (or week) and provide perks like discounts, complimentary products, free shipping, and more.
Finally, you can show appreciation by making the unboxing experience feel special. Popular ideas include handwritten thank-you notes, small gifts, and branded packaging—but the sky’s the limit!
6. Start a Loyalty Program
A loyalty program increases a customer’s lifetime value by keeping your brand top-of-mind and providing incentives to continue coming back. Loyalty programs also have another retention-promoting benefit: they allow you to learn more about your customers so you can tailor future email communication and social media posts toward specific audiences.
Let’s look at a few common loyalty program models and how they work:
- Point-based. Customers earn points for every purchase they make. Once they have enough points, they can redeem them for discounts, freebies, or other rewards.
- Tiered. Customers achieve different levels or tiers based on their spending or engagement, with each tier offering progressively better rewards.
- Membership. Customers pay a recurring fee to join a program that offers special privileges, such as free shipping or exclusive discounts.
- Referral. Customers are rewarded for referring new customers to the business, usually through discounts or points.
7. Prioritize Customer Service
When customers receive timely, helpful, and personalized support, they feel valued and appreciated. The result? Increased satisfaction for them, repeat business for you.
Consistent, high-quality service not only resolves issues efficiently but also creates memorable experiences that encourage customers to return. Satisfied customers are more likely to recommend your business to others, further expanding your customer base and strengthening loyalty.
These days, excellent customer service requires availability across various channels. Provide multiple contact options, including phone support, email, and live chat, allowing customers to reach out through their preferred method. To save time for customers (and your team), consider providing self-service options for tasks like checking order status or initiating returns.
How To Measure Customer Retention and Loyalty
Customer retention and loyalty can be measured by tracking key metrics such as net promoter score, repeat purchase rate, and average order value.
Measuring Customer Loyalty
The following metrics will help you get a sense of current customer loyalty and see where you can improve.
- Net promoter score (NPS). NPS measures the likelihood of customers recommending a brand to others. It’s calculated by asking customers how likely they are to recommend the brand on a scale from 0 to 10 and then subtracting the percentage of detractors (0-6) from the percentage of promoters (9-10).
- Customer lifetime value (CLV). CLV estimates the total revenue a business can expect from a single customer over their entire relationship. A higher CLV is a sign of greater customer loyalty and profitability.
- Customer loyalty index (CLI). Like NPS, CLI is determined using survey questions, but CLI takes a more holistic view of customer loyalty.
Measuring Customer Retention
Now let’s look at some metrics businesses use to measure customer retention.
- Repeat purchase rate. This metric measures the percentage of customers who make multiple purchases over a specific period. A higher rate suggests stronger customer loyalty.
- Average order value (AOV). While primarily a revenue metric, AOV can show retention trends when analyzed over time. Consistently high AOV may suggest that retained customers are spending more.
- Time between purchases. This metric tracks the average time between repeat purchases for customers. Shorter intervals between purchases are a sign of stronger retention, as customers are returning to buy more frequently.
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