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How to improve your eCommerce customer retention

This article originally appeared on

In 2013, an eCommerce company had to spend just $9 on acquiring new customers. They now spend almost $30 — that is a 222% increase in CAC. While we’ve seen exponential growth in the eCommerce industry, with rapid expansion comes intensified competition, making it challenging for brands to stand out.

In the race to capture consumer attention and secure a market share, businesses often find themselves targeting the same audience with similar products or services. As a result, customer loyalty to brands has seen a steady decline. And this declining customer loyalty and skyrocketing CAC is the reason why eCommerce brands must prioritize customer retention. By focusing on retention, the customer lifetime value increases, which helps fight CAC. And the more customers purchase from you, the more loyal they become. 

There are many ways to improve the retention rate, like having an omnichannel communication strategy. It’s essential because modern consumers interact with brands through various touchpoints, such as social media, search engines, and websites. And you never know from which channel they might buy your product. So you must create a seamless and consistent experience across all channels. 

eCommerce brands should also leverage analytics and Artificial Intelligence (AI) to revolutionize how they understand and engage with their customers. Imagine if you could govern your business with mathematical certainty. If you had a formula to break down the business and help you understand what levers to pull for better performance.

The eCommerce equation: Revenue = Traffic X Conversion Rate X Average Order Value 

Using AI-powered analytics, businesses can gain valuable insights into consumer behavior and preferences rapidly. For example, knowing which channels have better conversion rates can help you finetune your strategy for those channels. Armed with this knowledge, personalized recommendations and offers can be created, reaching out to customers in a contextual manner that resonates with their needs. And when your customers think that you understand them, they’ll prefer sticking to you. 

Gamified loyalty programs also work wonders in retaining customers. Injecting an element of fun into your loyalty program entices customers to stay engaged with your brand, unlocking rewards and benefits as they progress through the levels. This fosters a sense of excitement and exclusivity, increasing the likelihood of repeat purchases.

eCommerce business owners must also understand that loyalty is no longer just about purchasing products; it's about creating a sense of belonging and involvement. And how do you create a sense of belonging? By building a thriving community. You should encourage user-generated content, facilitate discussions, and seek customer feedback to strengthen the bond between your brand and its community. The more engaged they are with you, the more they’ll come back to you. 

Long story short, customer retention and acquisition are not mutually exclusive concepts but rather two sides of the same coin. While acquisition efforts drive new customers to your business, retention strategies keep them coming back for more. By striking the right balance between the two, eCommerce brands can create a virtuous cycle that propels their growth in the fiercely competitive industry. 

Authored By Prem Bhatia, Co-Founder and CEO, of Graas.

Prem Bhatia

15 Sept 2023

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