The Ecommerce Experience in 2024 & the Keys to Retention Marketing
In today's fast-evolving, shape-shifting DTC landscape, businesses face the challenge of balancing acquisition costs with optimizing lifetime customer value. Doing so requires prioritizing, developing and implementing retention strategies that go beyond traditional tactics such as loyalty programs on their own. It’s worth the time and investment. A five percent increase in customer retention has been proven to increase profits by as much as 95 percent.
Electriq has developed a proprietary method for scaling brands with a full lifecycle strategy, built with in-depth knowledge of, and experience within, the Shopify ecosystem. This post provides guidance for better understanding today’s ecommerce ecosystem and best practices for retention marketing.
Recognizing the importance of a retention strategy...and understanding which one is right for your business
There’s nothing like the thrill of winning new business. But as the old (but sadly, nearly always true) saying goes, the minute you win a customer is the minute you start losing them.
In order to stretch that timeline as long as possible, and minimize the “c” (as in, churn) factor, get a handle on key baseline metrics such as Average Order Value, Purchase Frequency Rate and Average Customer Lifetime. Doing so helps determine Customer Lifetime Value -- which, in turn, leads to realistic goal setting, and helps establish specific retention strategies most apt to drive growth and profitability. Importantly, strategies that are most effective when implemented soon after a customer is made.
Our experience shows that zero-party and first-party data are critical to helping online brands better understand their customers. They are rich in insights that determine which retention strategies and tactics are most apt to improve customer experience over the short-, mid- and long-terms.
Moving beyond traditional loyalty programs
Twenty percent of current customers typically account for 80% of a company’s future revenue. Plug and play loyalty programs are often the retention tactic used to keep those high-value customers in the fold.
Fundamentally effective retention strategies need to go beyond loyalty initiatives alone, no matter how well they may perform out of the gate. Our experience has made it clear that establishing powerful customer feedback loops needs to be prioritized from the start. Such unvarnished feedback is essential to enhancing and individualizing overall customer experiences and increasing Customer Lifetime Value.
To that end, vital factors and tactics to take consider include:
- Segmentation and personalization: the most powerful paths to enhancing the customer journey.
- Subscription services: when managing a subscription-based program, flexibilityand freedom are key and make it easier for customers to interact with a brand. Shun rigidity and embrace evolution.
- Loyalty and referral programs: simplicity is coin of the realm. When implementing these tactics, make it glaringly obvious what customers will get for their loyalty and for referring new customers. Don’t set pie-in-the-sky goals that may be impossible for most customers to achieve.
Effectively harnessing technology
Tech’s vital role in building robust and scalable retention strategies and programs is glaringly obvious. The mistake made by made by too many growing online businesses is defaulting to what we call the Frankentechstack: a ragtag collection of tools, held together by what may best be called digital Band Aids, that were never designed to work together. Moreover, that are viewed as ways to solve technology problems rather than helping to fundamentally grow a business.
Electriq has invested thousands of hours researching and implementing B2B tech. Our experience and customer success comes from working with best-in-class tech partners that understand retention strategies and how to implement them, from measuring baseline metrics, to putting the right personalization software in place, utilizing ideal subscription platforms and more. Since these tech solutions change literally every day, online businesses need digital marketing partners who can keep them on pulse of new and more powerful ways to maximize their CLV.
Consultations are available with Electriq’s team. For scheduling, please visit https://www.electriqmarketing.com/free-consultation
Author: Brandon Amoroso is Founder and President of Electriq, a Shopify Plus Certified Agency. Brandon is an ecommerce strategist who focuses on customer retention and lifetime value to drive DTC growth. Electriq was acquired in 2022 by DRINKS, the leading regtech provider to alcohol brands that sell DTC.