High customer retention rates are good for business. They improve profitability, strengthen your reputation, and help drive organic growth through brand advocacy. They’re also hard to achieve, with multiple hurdles standing in your way. Here, we define 5 most common customer retention challenges and how to knock them down and build a repeat customer base loyal to your brand.
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As an eCommerce merchant, acquisition efforts probably sit pretty high up your list of priorities. Understandably so, since attracting new customers is essential for driving sales and expanding your reach. 

Here’s the thing, though. Today's consumers have so many choices available to them - and such high expectations - that there's no guarantee they’ll stick around after their first purchase. In fact the average eCommerce retention rate sits at just 38%.

But what does it matter? Why can’t you just plug the hole with another new customer?

Why is customer retention so important?

Depending on who you ask, customer acquisition can be anywhere between 5 and 25 times more costly than customer retention. That’s a pretty broad spectrum, but it does make one thing clear - it’ll cost you more to win new customers than to hold on to existing ones. 

To break it down a little more:

On top of that, loyal customers are far more inclined to recommend you to their family and friends, so you get the added benefit of cost-effective acquisition.  

Customer lifetime value (CLV) may also be increased as repeat customers tend to spend more over time. As customers become more familiar and comfortable with a brand, they are more likely to make additional purchases and even increase the average order value (AOV) of those purchases.

In a nutshell, customer retention is important because it drives higher revenue and organic growth. With that in mind, let’s explore the most common customer retention challenges impacting your retention rates and how to fix them.

Top 5 Customer Retention Challenges and How To Overcome Them

Problem #1: Understanding Customer Needs

A good retention strategy starts with your customers' wants and needs, as if you fail to live up to expectations, you’ll lose out to a competitor that does. Unfortunately, the nature of eCommerce makes it pretty tricky to understand what these are.

First up, there’s no personal interaction, so you can’t pick up on facial expressions or cues that might indicate how they feel about their experience - nor can you ask them face to face. Then there’s how quickly things move in eCommerce, with shopping trends and preferences changing all the time.  

From the usability of your site to the quality of your products, knowing what customers want - and how to deliver - is one of the biggest hurdles in achieving high retention rates.

How to understand your customers better?

Ask for feedback: be proactive in asking customers what they think. Post-purchase surveys are a great way to learn more about the highs and lows of the buyer journey, whilst ratings and reviews can tell you how well your products live up to expectations.  

Monitor social media: be part of the conversation by monitoring social platforms where your customers are active. Look out for any mention of your brand, products or competitors to gauge current sentiment and expectations. 

Mine your reviews: by using our AI Assistant to mine through your review data, you are able to detect patterns in your reviews by asking questions such as: Can you identify any common customer pain points or challenges that are mentioned in the reviews? Allowing you to see areas that you can improve on to better your customers' experience.

Stay up to date: new technologies and shifting behaviors influence what customers expect from you, so make sure you’re informed about current trends in the eCommerce space.  

Analyze user sessions: make use of analytics tools that allow you to replay store visits. Track user behavior, navigation patterns, and interactions to understand how customers engage with your site and to identify common points of friction. 

Problem #2: Delivering Quality Customer Service

How you treat your customers has a direct impact on your retention rates, and there’s not much room for error. Studies have found that half of consumers would switch to a competitor after just one bad experience, with a whopping 80% jumping ship if those bad experiences number two or more. 

Again, it’s the nature of eCommerce that makes customer service such a challenge. 

Frustrations can arise from insufficient product information, technical glitches with your website, or problems with third-party logistics (3PL) providers that are out of your control. 

Sometimes it’s just the sheer volume of inquiries that makes it difficult for support teams to cope - a key problem during peak seasons or promotional events. 

How to uplevel your customer service?

Leverage automation tools: use helpdesk solutions that automate repetitive tasks, route inquiries to the right departments, and provide self-service options like Chatbots. This helps support agents deal with issues in a timely and effective manner. 

Optimize your website: give customers the information they need to limit frustrations, like detailed product descriptions and reviews with attributes that give greater insight into product specifics

Use customer data: create and segment customer profiles in your helpdesk using data from past purchases, reviews and customer service interactions. When agents have more information on a customer’s history they can personalize support. 

Measure customer service metrics: track KPIs like response times, resolution rates, Customer Satisfaction Score (CSAT) and Net Promoter Score (NPS), then use the data to improve your customer service efforts.

Problem #3: Conveying Your Products Value

It’s hard to build a repeat customer base when your customers are price-sensitive. All it takes is a competitor to undercut you, and you’ve lost their attention. 

To eliminate price sensitivity, you need to convey the added value customers get when they buy from you

One of the key challenges here is a lack of tangibility. Customers can’t interact with your products, so you’ll need to find creative ways to communicate their benefits and why they add value.

You’ll also need to think about how to build a rapport with customers when there's no face-to-face dialogue. 

3 ways to showcase your products value

Share authentic UGC: use visual reviews and social media content from past customers to engage new ones with more tangible product experiences. Display UGC on your website and across all your marketing channels to convey value through social proof.  

Optimize product pages: make these value-driven by highlighting key product benefits. These should be clear in your product descriptions and validated through customer reviews. Try publishing snippets of review content specific to these benefits next to your ‘Buy Now’ buttons. 

Highlight your common values: brands that commit to positive change are more appealing to today’s conscious consumers, so get behind causes that resonate. Communicate what you stand for and be transparent with your claims. 

Problem #4: Personalizing the Customer Experience

Personalization plays a major role in customer retention, with 78% of consumers more likely to make repeat purchases from brands that personalize

Of course, the growing expectation for unique shopping experiences coincides with a growing demand for privacy. And therein lies the problem.

How do you offer each customer an experience tailored to their preferences whilst respecting their privacy and data protection concerns?  

Ways to personalize customer experience without invading their privacy

Invest in on-site personalization: make the on-site experience more relevant with tools like Boost’s product recommendation engine. These use sophisticated algorithms to deliver personalized suggestions based on browsing behavior and purchase history.  

Collect zero-party data: this is data willingly given by the customer, and you’ll typically find them happy to share their interests and preferences in exchange for a better experience. Key sources of zero-party data include surveys, reviews, and loyalty programs.

Segment your audience: start by determining the criteria you will use to segment your customer base. This can include factors such as demographics (age, gender, location), psychographics (lifestyle, interests, values), purchase behavior (frequency, average order value, product categories), or customer lifecycle stage (new customers, repeat customers, loyal customers). 

Choose criteria that are relevant to your business and align with your retention goals.

Build an integrated tech stack: eCommerce solutions that are built to work together allow for the seamless transfer of data. This allows you to deliver consistent personalization across all customer touchpoints. 

Problem #5: Fostering Long-Term Loyalty

Loyalty and retention go hand in hand. When customers feel a strong connection to your brand, they’re more likely to buy from you time and time again. But long-term loyalty isn’t as easy to come by as it once was. 

Customers are exposed to an increasing number of independent brands hoping to win favor, and the digital space makes it easy for them to compare their options. 

If you want to drive those repeat sales, you need to find ways to build emotional ties through ongoing and meaningful engagement. 

How to build long-term relationships with customers?

Implement a loyalty program: encourage an affinity with your brand by rewarding customers every time they make a purchase. Think beyond the rewards themselves, too. A loyalty program is a great vehicle for personalized engagement that helps build emotional ties. 

Create a community: today's consumers crave a sense of belonging, so create a shared space for like-minded shoppers to come together. This makes your brand part of something bigger and fosters deeper connections that promote loyalty. 

Reward brand advocacy: keep your most loyal customers engaged by incentivizing them to share their positive experiences. Whether through referrals or affiliate marketing, giving the customer something back in return for their advocacy strengthens bonds, while also extending your reach. 

Grow Your Brand Through Successful Customer Retention

There’s no quick win for a repeat customer base. A good retention strategy takes time and effort, and should form an integral part of your business plan.

Remember, it’s not about immediate gains but driving long-term sustainable growth.

If you don’t yet have a tool for surveys, reviews and UGC, check out the REVIEWS.io solution. It’s full of innovative and user-friendly features to help you build trust, understand your audience, and drive post-purchase engagement. 

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