You’ve likely heard the saying your best customer is your current customer. Or that it is cheaper to get an old customer to buy from you again than it is to win a new customer. These statements highlight the significant impact customer retention for WooCommerce can have on your business.
Customer retention is vital for every type of business and ecommerce is no exception. Getting people to buy from you again and again helps boost your revenue and keeps your business thriving.
In this post, we’ll further analyze why customer retention is such an important part of running an ecommerce business and strategies you can implement for your WooCommerce store.
Why is customer retention important?
Let’s start with a basic understanding of what customer retention is. Customer retention measures the rate at which your buyers continue to purchase from your business after their initial purchase.
Like other key marks of ecommerce success, there is a simple metric for determining your customer retention rate. You can calculate customer retention with the following formula:
Number of customers at the end of period - number of new customers gained during the period / number of customers at the start of the period X 100
Below is an example:
Let’s say you had 1,000 customers at the end of the period, gained 250 customers during the period and had 800 customers at the start of the period.
Your formula would be as follows: (1,000 – 250) / 800 x 100 = 93.75%
High customer retention rates mean you have loyal customers and that you are not losing them to your competitors. It is a clear indication that your products meet their needs and that you provide an enjoyable buying experience, otherwise they wouldn’t have a reason to business with you again and again.
Benefits of increasing customer retention
Strong customer retention depends on truly understanding the needs and interests of your buyers so that you can give them everything they're looking for. If you can achieve this, it can have a profound impact on the success of your business.
Here are some of the biggest reasons customer retention is important for ecommerce companies:
Lower customer acquisition costs
Your customer acquisition cost (CAC) measures the average amount that you need to spend to win over a new customers.
For example, let’s say you acquire 10 customers over a period, all through paid advertisements — which cost you a total of $100 in ad spend. In this scenario, your CAC would be $10.
This simplified example shows all customers coming from ads but in the regular course of ecommerce business you’ll have a mix of paid customers, organic customers, and repeat customers.
Improving customer retention means you get more repeat customers. By increasing the number of buyers that are acquired without paying for them you lower your overall CAC. the result is higher profitability for your business.
Growing your business is quite difficult if all of your efforts are spent on winning new customers. Beyond spending the time to market to new audiences, you’ll need to invest financial resources that could otherwise go towards improving your products or expanding your offering.
Improving your customer retention rate allows you to continually generate revenue from the buyers that you already have. In turn, you don’t need to focus all of your efforts on constantly finding new customers and can instead work on improving other areas of your business.
The longer someone remains an active customer the more loyal they will be to your business. Customer loyalty is important not just because it means a higher customer lifetime value (CLTV) but also because these loyal customers often become one of the best marketing assets your business will ever have.
Loyal customers are likely to recommend your brand to their family and friends. This referral marketing is the most effective form of ecommerce marketing as people tend to be more trusting of their peers when compared to traditional marketing methods such as advertising.
Customer retention for WooCommerce Stores
Start a loyalty program
Loyalty programs are designed to give ongoing rewards to those enrolled in the program. By rewarding your most loyal shoppers, you encourage them to continue doing business with your company. These programs also help strengthen relationships and make members feel like they are part of a community.
Setting up a loyalty program with WooCommerce
WooCommerce Points and Rewards helps you run a loyalty program directly from WordPress by rewarding customers with redeemable points for purchases and other actions.
After you activate the plugin, you need to configure your Point Settings by going to WooCommerce > Points & Rewards > Settings. The first things you’ll want to set up is your Earn Points Conversion Rate. This determines the dollar value that each point can be redeemed for.
For example, with a 1:1 ratio, one point is good for $1 worth of products on your site.
Another setting you can potentially configure is the Partial Redemption option. With this feature you can give shoppers the freedom to choose how many points they want to redeem. For instance, if a member has 100 points and they are buying an item whose total value is worth 75 points.
If the customer wanted to keep part of their balance for future purchases, they could choose to only use 50 points on the order, paying for the remaining price of the product.
The plugin also gives you the ability to set up a minimum amount of points that customers need to have earned before they can redeem them for a discount.
If you want to rewards points for actions other than purchases, you have a few options. Specifically, you can choose to reward your customers with points for signing up for a store account or leaving a review for a past order.
Displaying points and discounts messages
When you have an active points and rewards program, you can choose to display the number of points rewarded for buying a product on its product page. Similarly, after adding items to the cart and proceeding to the checkout page, you can show customers how many points they’ll get for their order.
You also have the option to display a notification with how many points the customer has in their account that are eligible to redeem on the order.
Run remarketing campaigns
While some customers will be naturally inclined to return to your shop, others will need regular reminders about your products. Remarketing to these buyers is a great way to get back in front of them to encourage them to make additional purchases.
When it comes to ecommerce remarketing campaigns, email is the most effective medium. With each order, you’ll receive the customer’s email address, giving you a direct line to communicate with them. Beyond that, email is great because it allows you to be very targeted with your marketing.
You can segment your list based on a customer’s specific interests to send messages that are relevant to them.
Remarketing can begin as early as once the order is placed. This can take the from of using the order confirmation email to cross-sell other items in your catalog or by offering a discount for future purchases.
Using Mailchimp for remarketing emails
Mailchimp integrates seamlessly with your WooCommerce store and is great for setting up a variety of remarketing campaigns. To use the platform, you’ll want to activate the Mailchimp for WooCommerce extension and link your account to your store.
Then you can go to the Customer Journeys page or the Classic Automations builder to set up your campaigns.
With each tool, you’ll see a list of pre-made templates to help you get started. Some of the templates include:
- Welcome new subscribers when they first join your list.
- Follow up on purchases by asking for a review
- Reward your best customers with an exclusive offer
- Retarget site visitors to remind them about products
- Say 'happy birthday with a promo code on the subscriber’s birthday
If you want to start from scratch, there is a link in the template menu for you to create a custom automation.
After you’ve selected a template or Custom start, give the campaign a name and select Begin. You’ll then click Design Email to customize the detail of your messages.
Create a referral program
Referral programs are another method of incentivizing past customers to come back to your business. Unlike a loyalty program that simply rewards people for their past purchases, a referral program rewards members for referring new customers to your business.
The most common types of referral rewards are discounts or store credit that can be used on future orders. Naturally, people need to buy from you again to cash in on these rewards so starting a referral program is a great way to keep them coming back to your store.
Here are several approaches you can take to setting up a referral program for your WooCommere shop:
Referral System for WooCommerce
Referral System for WooCommerce is a plugin that allows you to set up a referral program directly in WordPress.
The extension can act as a standalone plugin where discount coupons are created and sent to members. Or, it can integrate with the WooCommerce Points and Rewards extension. With this setup, customers receive loyalty points as referral rewards.
No matter which approach you take, the plugin gives each member a unique link for inviting referrals. The referral link is available from the customer’s account page in a new tab called Referral link. This page also has social sharing buttons for users that want to quickly promote their link to their peers.
The plugin features two types of rewards. First is signup rewards. These are rewarded upon a referrer bringing a new referee to the program.
There are options to have the coupons rewarded to the referrer, to the referee, or both. You can choose to have coupons with fixed prices or percentage discounts.
With Order-Based Rewards, you can have referrers and referees get a reward when the new member places an order.
ReferralCandy is a third-party solution that gives merchants everything needed to create and manage a customer referral program. It offers a variety of reward types and you can quickly sync the platform with popular ecommerce platforms, including WooCommerce.
With coupon rewards, advocates receive an email with a discount code when they earn a reward for a successful referral. The advocate can also access their coupon codes from their Portal Rewards Page.
Coupons can be single or multi-use. If you plan to use single-use coupons, you’ll need to upload a list of coupon codes from the Rewards section of your ReferralCandy dashboard.
Cash rewards allow referrers to earn a direct cash payment for each person they refer. This can be a fixed cash amount like a $10 payment per referral. Or it can be a percentage of the value of the referee’s purchase. For example, the referrer would get a $5 payment if you set a 5% cash reward and the referee makes a $100 order.
The cash rewards are delivered automatically through PayPal. They are sent to the account with the same email address that the referrer used to sign up for the program.
Provide a great customer experience
Customers want their shopping experience to be as seamless as possible. Companies that consistently provide the experience buyers seek are more likely to retain them over time. With so much competition in today’s market, it is easier than ever to look for alternatives if a brand makes the buying experience a difficult or stressful affair.
Here are some ways to create a great customer experience:
The most obvious way to create a great experience for your buyers is to offer high-quality products. At the end of the day, a customer won’t be happy if the item they pay for doesn’t satisfy their needs. So before you start worrying about fast shipping or smooth checkout flow, make sure your product is airtight, since this is what the business is ultimately about.
Efficient order fulfillment
Thanks to the likes of Amazon, fast shipping has become the default expectation of ecommerce buyers. If your items take a long time to arrive, you can easily frustrate your buyers. When this happens, many will be hesitant to buy from you again, regardless of how great your product is.
So, it’s important to ensure your order fulfillment process is as efficient as possible. Assuming you won’t be hand delivering each item yourself, your shipping times will be determined by the carriers that you use. However, it is in your hands to make sure that each order dispatches quickly as to not add unnecessary waiting to the overall delivery time.
Furthermore, it’s essential to keep customers in the loop throughout the process. By default, WooCommerce sends customers a confirmation email when an order is made. In addition to this message, you also want to send each customer a shipping confirmation email once their order leaves the carrier.
The message should include the tracking number for their delivery. With GoDaddy’s Managed WooCommerce Stores, you get the shipment tracking feature built in to your WordPress dashboard. This means you simply need to upload and save the tracking number to the order manager and the customer will automatically get it in the shipping confirmation email.
Closing thoughts on customer retention for WooCommerce
Driving repeat purchases is the key to growth and continued success. Start by making your product the best in your industry. This will naturally make you a more attractive option than the competition. Then, you can begin implementing the strategies in this guide to keep your customers for the long term.