5 Strategies for Improving Customer Retention Rate (CRR)

We’ve already covered the best ways to track and calculate CRR, but like AOV, CLV, and conversion rate, higher is always better.

In fact, according to Bain & Company, a 5% increase in customer retention rate will result in a 25-95% increase in profits.

There are several strategies to improve your customer retention rate, and thus earn more revenue for your online store.

So how can you keep your customers coming back again and again?

1. Offer Customer Accounts

When you allow your customers to create an account on your site, you incentivize them to purchase with you again.

A customer account is not only a great way to make life easier for your customer, it also gives you access to key information about your customer, like their email address.

Streamlining your checkout process is critical to boosting your conversion rate, and returning customers that simply need to log in to complete their purchase. They make it easier to repurchase, as their address and sometimes billing information is already saved, which raises the chances that they’ll repurchase.

With that said, don’t force your customers to create an account before completing their purchase. One of the best ways to get a customer to abandon their cart is to force an account on them at checkout.

Think about it: you already anticipate entering in an encyclopedia’s worth of information just to complete the purchase, but now you have to enter in even more information (and potentially have to navigate back to your email to “confirm” your account)?

Ain’t nobody got time for that. Especially if your customers are on mobile.

Also it might turn off customers who just want to make a one time purchase from your store. Creating yet another account feels like too much effort and commitment.

Should you give up on those customers? No. They might intend to only purchase from you once, but if you give them a good enough experience, chances are, they’ll be back.

So how do you get customers to create an account without inadvertently increasing your cart abandonment rate?

Simple: Ask for the account creation after the purchase has been made.

Offer a simple guest checkout for those who don’t feel like creating an account. Once they reach the confirmation page, offer to create an account with incentives:

  • “Just Enter a Password to Create an Account”
  • “Create an account for tracking information”
  • “Create an account for 10% off your next purchase!”

By offering simple incentives and an easy way to create an account, your customer will want to create an account (and is likely to log in again in the future).

If this option doesn’t work for your store, and you’re going to force customers to create an account anyway, at least offer a one-click account creation option. Let them create an account with Google or Facebook.

best buy create account guest checkout

Notice how BestBuy offers “Sign in for faster checkout” but allows customers to checkout as a guest. They also allow you to create your account via Facebook and Google to make things easier.

If you make it easy for your customers and you give them a good reason to do so, you’ll get more customers creating accounts in no time!

2. Optimize your Customer Service/Experience

I can’t stress enough how important customer service is.

Do you remember the last terrible customer service experience you had? Do you remember the best?

I bet you can- because experiences that fall into the extremes are the ones that are impactful.

Mediocre customer service? Run of the mill service? Status quo help? Forgettable.

Understand that the customers who fall into the extremes are the ones you’re most likely going to hear from in one way or another. Creating a phenomenal customer service experience is what’s going to make the difference between customers coming back and customers warning their friends to stay away.

So here are a few tips on creating a customer service experience that is unforgettable (in a good way).

Make Yourself Available

One of the biggest ways you can improve customer service is by making yourself very available. Offer several options for your customers to get in touch with you:

Email:

Nothing tells me run for the hills than an online store that doesn’t have an email address I can contact through. Chances are, some of your customers might feel the same way.

Email is great for people who need something looked into, but it’s not particularly urgent. Obviously, you should still respond in a timely manner, but this channel is great for those who don’t have the time or patience to sit on the phone.

Phone:

For those of us who wonder if our emails are getting read, sometimes you just need something dealt with by talking to a human being. It offers a sense of security knowing that there’s someone dedicated to taking care of your customer’s problem.

Having a telephone number on your site shows that you’re open to your customers coming to you with their problems. Do what you can to reduce hold times, and make sure the customer doesn’t have to recontact you to get the problem sorted.

Livechat:

Livechat is a beautiful mix between phone and email support. This option is really helpful because you get the immediacy of phone support without having to sit on the phone. This channel is especially helpful for your multitasker customers who are likely doing a variety of other things while handling their customer service issue.

This channel is also especially useful pre-sale for those who have questions about a product, shipping or returns, or anything else that might be helpful in making a purchase decision. It shows your customer that you’re there for them whenever they may need you.

Social Media Support:

A very popular method with younger demographics, social media can be a great platform for support and service. Many tend to go straight to Twitter with questions about an order, and with the rising popularity of Facebook messenger support, social media is a great off-site channel for your customers.

It’s all about staying connected to your customers and listening to their feedback as much as being proactive about being approachable.

abel&cole customer retention rate

Abel & Cole offers transparency in the number of ways you can get in contact with them.

If you show your customers that it’s okay to reach out and get in contact, they’ll be more likely to trust you and will have confidence that you’ll resolve their issues.

Ask for Feedback

Customer retention is about making your customers happy enough to choose you again. Knowing exactly what’s going well and what isn’t is crucial to improving your customer experience.

But how do you go about finding out all this information?

Ask them.

Sending an email or a survey after purchase can be a great way to get feedback on how your customers experience was shopping with you. If a survey or questionnaire doesn’t work, you can always offer a small incentive to leave a review.

The value of reviews on your site can’t be overstated- they help customers (both new and repeat) trust your brand more, and they do wonders for your SEO.

A soft approach to getting feedback is by using a Net Promoter Score questionnaire.

net promoter score

While the NPS is an important KPI for understanding what percentage of your customers are happy with your brand, it’s important to follow up with an open-ended question for more information.

Those who give the highest and lowest scores are more likely to answer that question, leaving the Passives more or less aside, but that’s what you want.

You want to know where you’re doing well, and where you aren’t. Once you have that information, you know what you have to fix.

Listen and Respond to Feedback

When you do get negative feedback, the number one key is to listen to that feedback.

No, really. You need to listen to them.

If your customer is taking the time to review you or give you any kind of feedback, it’s time to listen because they’re basically telling you what you can fix to make things better for them.

If you have reviews on your site or on social media, you should respond to each and every one of them. This shows your customers that you’re listening.

Especially when you have a bad review, ask your customers publicly how you can make it right. Do as much as you can in public so other customers and potential customers see that when things go wrong, you try to fix it.

amazon customer retention

Weigh the costs of fixing a problematic situation for the customer- because if you make the customer happy after a poor service experience, you can turn an angry/disappointed customer into a ride or die fan.

Offer “Just Because” Bonuses and Gifts

Sometimes, making your customer experience really shine is as simple as a little bonus that shows the customer you appreciate their business.

It doesn’t have to be pricey, sometimes just a hand-written note can add that personal touch. Try a piece of candy if that works with your brand image. I have one company that I purchase from frequently, and they always throw in a magnet and a piece of candy.

That’s not the reason I order from that store, but it’s nice to feel appreciated. Sometimes a few “just because” surprises can delight your customers and make them feel special.

This idea also falls into the law of reciprocity. When you do something for a customer, subconsciously, they can feel like they should do something for you too. This reinforces the customer loyalty aspect: “I should shop with brand X because they gave me this coupon, and I should use it.”

The point is, show your customers they matter to you. It doesn’t take a lot of time or effort, but the little things do count.

3. Utilize a Customer Loyalty Program

We can’t talk about customer retention without mentioning customer loyalty programs. Simultaneously boosting retention, conversion rate, and AOV, putting a great customer loyalty program in place is probably the best strategy you have for customer retention.

In fact, customers who subscribe to a loyalty rewards program spend 13.7% more than those who don’t.

You want to create a program that makes it more advantageous or even profitable to shop with you over your competitor.  Also, customer loyalty programs incite your customers to purchase more frequently with you.

Not only that- a customer loyalty program helps you boost your customer experience by offering your customers more value at your store.

Create a tiered customer loyalty program

When creating a customer loyalty program, create a tiered system that has your customers moving up towards better benefits with more purchases/amount spent.

This does a few different things for you: First, you get to see which of your customers are your most valuable customers, because they’ll move up the tiers quicker than others.

Second, this will incentivize your customers to purchase more and more frequently with you so they can get better rewards. This brings in a gamification aspect by allowing customers to unlock store credit, special discounts, or other VIP benefits.

skinny ties customer retention

If you want to see the example of a great customer loyalty program, look no further than Amazon Prime. Their benefits are so good, that customers actually pay to participate.

That’s what you should strive for.

Offer welcome points for joining

When a customer signs up, give them a taste of what’s to come by offering a few “thank you for signing up” points. When they see how easy it is to earn points, they’ll be more eager to start earning them.

Use the rewards system to incentivize reviews, surveys, testimonials, etc

Offer your customers more points or rewards for leaving reviews on your site. Those reviews are priceless, and offering up a few points is definitely worth it for the SEO and customer trust bonus that you’ll get in return.

You can also take this a step further and offer points for social shares, recommendations, and referrals. Combining a customer loyalty program with a referral program can be just the thing to boost customer acquisition with little to no cost to you.

4. Benefit from Email Marketing

Email marketing is your best friend when it comes to customer retention. This channel does amazingly well in conversion in terms of ROI, and as long as your emails are relevant and not spammy, your customers will enjoy hearing from you.

For email marketing to really work for customer retention, each email has to add value to  your customer experience in order to keep building the relationship with your customer.

Confirmation and Order Updates

For example, once a customer has purchased from you, send the confirmation email with what they ordered. This reassures your customer that the purchase has been taken and everything is good to go.

From there, you can send them updates on the status of their order, which adds value to these customers. These kinds of emails have the highest open and click through rates of any other kind.

Product Recommendations

Use that to your advantage by slipping in a product or two that relates to the products that they just purchased. They may not repurchase immediately, but using product recommendations gives your customer something to think about while they wait for their products.

Personalization

Make sure that your emails are also personalized. Call your customer by their first name, if possible, and make sure that everything you send to that customer is completely relevant to them.

The products shown shouldn’t be out of the blue. If you want them to resonate with your customer, they have to be relevant.

Restock Emails

For low-lifetime products, your emails should be timed to reflect when your customer would need to restock.

For example, if you sell something that has a shelf life of about a month or so, make sure your emails are going out about a week before that month mark with similar products or a simple “Click to order now” CTA.

The idea with email marketing is that it keeps your brand at the forefront of your customers minds. If you stay on top of them, without harassing them of course, when they come to need a product that you might carry, they’ll head right to your store without looking further.

5. Offer an Incentive to Return

Give your customers a reason to come back. If you feel that maybe your products and services weren’t enough to pull them back, offer a gift for coming back.

torrid customer retention

From Torrid.com

There are tons of ways you can incentivize your customers to return:

  • Free shipping, if you don’t already offer it
  • Discount codes & Sales: don't overdo this one- your customers will never pay full price for something if they think you’ll just discount it next week
  • Free gift with purchase
  • Donation to a charity for each purchase

These types of offers are great for customers that are fading away or are relatively new. For example, an incentive like this right after the first purchase as a “thank you” is especially effective at giving your customer a great reason to come back. It also gives them an idea of what they can expect from being your customer.

Discounts and freebies are a great way to show appreciation, but again, don’t overdo it. You want something like this to be a nice surprise, as opposed to something the customer expects. If you’re handing out discounts left and right, they’ll lose their effect.

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These are just a few of the great customer retention strategies that are possible, and using these strategies is a great way to keep your customer retention and your revenue high.

Regardless of what strategies you use, keeping your customers at the center of your business is what will keep them coming back and reducing customer churn.

By listening and giving your customers what they want and need, providing stellar customer service, and making it more advantageous to shop with you, you’ll foster profound relationships with loyal customers.

What do you think is the best way to retain customers?

Whitney Blankenship

Content Marketing Manager
Whitney Blankenship is Content Marketing Manager at Divvit. When she’s not creating awesome content, she’s reading up on the latest in Social, Digital, and Ecommerce trends. She’s also the fastest Googler in the West!
Whitney Blankenship is Content Marketing Manager at Divvit. When she’s not creating awesome content, she’s reading up on the latest in Social, Digital, and Ecommerce trends. She’s also the fastest Googler in the West!