{"id":84854,"date":"2022-07-22T07:40:41","date_gmt":"2022-07-22T14:40:41","guid":{"rendered":"http:\/\/thegood.com\/?post_type=insights&p=84854"},"modified":"2025-05-15T11:53:18","modified_gmt":"2025-05-15T18:53:18","slug":"improve-ecommerce-customer-retention","status":"publish","type":"insights","link":"https:\/\/thegood.com\/insights\/improve-ecommerce-customer-retention\/","title":{"rendered":"9 Strategies To Improve Customer Retention (The Key To Ecommerce Growth)"},"content":{"rendered":"\n

Ask a group of ecommerce VPs which marketing metrics are most important to track, and you\u2019re sure to hear mentions of gross margin, conversion rate, and average order value. Oddly enough though, you\u2019re less likely to hear one of the key metrics mentioned: customer retention rate.<\/p>\n\n\n\n

Why is that?<\/p>\n\n\n\n

Marketing teams tend to measure success in terms of sales revenue. That\u2019s as it should be. You\u2019re in business to turn a profit. When you focus on total sales, though, you value your new customers just as much as repeat customers. That picture of customer value entirely misses one huge point: Customer acquisition costs far outweigh customer retention costs.<\/p>\n\n\n\n

Every dollar you invest in getting one new customer to place an order could contribute to delivering ten or more repeat sales \u2013 if that same dollar was invested in tactics aimed at improving customer retention and brand loyalty.<\/p>\n\n\n\n

Any top-notch salesperson will tell you the real job starts after the first order is placed. The sales path is more accurately described as a circle leading from hearing about you to listening to and believing you, to placing an order \u2013 then on to helping get the word out to others and purchasing again and again.<\/p>\n\n\n\n

\"customer<\/figure>\n\n\n\n

What is customer retention?<\/strong><\/h2>\n\n\n\n

Customer retention refers to the rate at which customers stick with your brand over a certain period of time. The higher your customer retention rate is, the more existing customers you have coming back for more.<\/p>\n\n\n\n

Customer retention rate is a particularly crucial metric for ecommerce brands today since shoppers have so many choices. It\u2019s easy to jump ship to a competitor when they\u2019re a dime a dozen. But, if your retention rates are high, it shows you have a loyal customer base and in-demand products.<\/p>\n\n\n\n

How do you measure customer retention rate?<\/strong><\/h2>\n\n\n\n

Like most ecommerce metrics, there\u2019s a handy formula to work out your customer retention rate:<\/p>\n\n\n\n

(Number of customers at end of the period – number of new customers acquired during the same period) \/ number of customers at the start of the period x 100<\/em><\/p>\n\n\n\n

If you had 300 customers at the end of your chosen period, acquired 150 new customers during that time, and had 400 customers at the start of the period, the formula would look like this:<\/p>\n\n\n\n

(300 – 150) \/ 400 x 100 = 37.5%<\/em><\/p>\n\n\n\n

This is a pretty standard percentage since the average customer retention rate for ecommerce brands hovers around 30%<\/a>.<\/p>\n\n\n\n

Why customer retention is important in ecommerce<\/strong><\/h2>\n\n\n\n

Customer retention rates track both new and existing customers to determine how likely a shopper is to stick around. It highlights how good you are at acquiring new customers, but also how many existing shoppers come back\u2013which indicates high customer satisfaction levels and an enjoyable customer experience.<\/p>\n\n\n\n

There are several reasons why customer retention is important for ecommerce brands:<\/p>\n\n\n\n