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Getting repeat customers back into your online business is an important element of your e-commerce success. In today’s article, we’ll look at how you can optimise your efforts and increase the amount of repeat customers your online shop gets.
What is the value of repeat customers?
Repeat customers can bring loads of value to your business. Not only is it economical from a sales perspective, but it will also help build your shop’s reputation among consumers – an important process when it comes to creating a proper brand.
Later on, we’ll discuss some of the most important KPIs that will be affected by stronger returning customer numbers. But here’s a sneak preview: we’ll look at customer lifetime values (CLVs) as well as customer acquisition costs (CACs). All in all, boosting repeat customers can significantly lower your marketing costs.
From a brand perspective, having more repeat customers means your business will benefit from happy customers singing your praises. Whether through word-of-mouth or online reviews, having more repeat customers means you’re doing something right – and the more likely people will start letting each other know about their great experiences with you.
How to increase repeat customers
Now that you know the value of repeat customers, let’s look at some strategies for boosting those numbers.
Create a foundation for loyalty
Creating a loyal group of customers is no easy task. It all really begins with what you can do to make them loyal. Naturally, the customer journey needs to be looked at from front to back.
Quality control of products
It all begins with your products, doesn’t it? Snazzy marketing efforts can bring you plenty of sales, but it may lead to plenty of returns and negative reviews – which can cost you money in processing as well as cost you your reputation... That’s the price of looking for short-term success.
Make sure your products are of high quality. Do you collect product reviews? Have you noticed any patterns regarding which products lead to the most negative reviews. Alternatively, you should be able to find that information in your systems as well.
Customer service
Although customer service often happens at the tail end of a purchase, plenty of shops offer free advice and consulting before a purchase. Shops of all sizes can offer this feature. However, it is particularly important for shops that offer high-priced items.
People who are going to spend a lot of money on a product tend to like buying things in person. It makes them feel safer about their purchase. Salespeople are there to advise customers for big purchases. Giving customers a way of contacting you before a purchase will help them feel good about your business.
Stay engaged with your customers
Speaking of reviews, this can be a great way to stay engaged with your customers. After all, customer reviews don’t need to be a one-way street. By responding to reviews, you can bring lots of positive attention to your shop, even for negative reviews!
Replying to all kinds of reviews is important.
Replying to positive reviews builds loyalty with happy customers. They feel heard and replies can reinforce their positive experiences.
Replying to negative reviews can not only help you repair a damaged relationship with a customer, but it can also help showcase your customer support to potential customers.
Replying to reviews can be time-consuming. Learn about how Trusted Shops utilises artificial intelligence to save shop owners time while helping them boost their online reputation.
Learn more about the Smart Review Assistant.
However, replying to reviews is not the only way to stay engaged with your audience. Social media offers a lot of ways to create a community and strengthen your relationship with your audience (more on that later).
Utilise customer feedback to optimise your business
Collecting reviews and replying to reviews has more benefits than just marketing for your business. Customers have taken the time to give you valuable feedback, so really listening to them can bring great value to your business.
We’ve touched on some of these points in the last sections, but by paying attention to your customer reviews (and anywhere else you hear feedback about your brand), you’ll be able to pinpoint your pain points (that’s a tongue twister).
Whether it’s your products, your customer service, logistics, packaging, or returns, taking this feedback and implementing changes will improve your reputation and the likelihood that shoppers will come back for a second purchase.
With a strong foundation for loyalty, let’s look at some other ways to boost repeat business.
Retargeting campaigns
Running advertising campaigns digitally has revolutionised the advertising industry. By allowing advertisers to utilise user data on social media and search engines, they can display their ads to the perfect audience.
One option is to target previous customers (referred to as retargeting campaigns). By implementing pixels and other tracking devices onto your website, you’ll easily be able to push ads to your previous customers, who are more likely to convert than new customers.
Source: Shutterstock/Eugenia Porechenskaya
Of course, these advertising platforms charge more for highly targeted ads. It’s up to you to do the math and see if the cost of targeting previous customers in your ad campaigns is worth it. At the very least, it may be worth a shot. Just be sure to keep an eye on how much theses customers spend on those follow-up purchases.
With that in mind, there are other strategies for getting those customers back into your shop...
Email marketing & personalised shopping experiences
Email marketing might seem ineffective and old-fashioned, but in actuality, it is still one of the most efficient marketing techniques available today.
Try to get your shoppers to sign up for your email lists. These emails could be created in order to inform them of upcoming offers, new product releases, or you might even create a newsletter to provide content related to your niche. Content marketing can be a great way to build loyalty within your industry.
Either way, being able to get your brand into previous customers’ inboxes is a great way to drive traffic to your website. And they are also a great way to create personalised experiences.
You can segment your lists based on the products that have been purchases or other identifying information. For example, if you are a clothing retailer, you might segment your lists by gender. By automating personalised emails to those groups with products that they are more likely to purchase, you can boost the chances of repeat purchases for a relatively cheap cost compared to retargeting ads.
Create a loyalty programme
After you’ve set up a foundation for loyalty, it’s time to consider some additional things to boost repeat business even more. Creating a loyalty programme can be a great way to increase repeat customers.
Source: Shutterstock/tomertu
Loyalty programmes can inspire customers to return to your shop and even to have higher basket values so they can claim their rewards faster. In essence, it works similarly to how a minimum basket value to qualify for free shipping works. Sometimes, consumers are willing to add another small item to their basket if it helps them take advantage of a specific benefit.
Combining a loyalty programme with a smart (personalised) email marketing workflow can be a great way boost returning customers.
For a full overview of loyalty programmes, check out our previous article:
Recommended reading:
What Kind of Loyalty and Rewards Systems Work for Small Businesses?
Social media
We touched on social media a bit in a few sections. Remember, you can create retargeting campaigns through social media ads. You can also stay engaged with your audience organically (i.e. for free!)
By having a strong social media presence, you can really create connections with your audience. That can be a powerful tool for building customer loyalty and boosting repeat business.
Don’t stick to simply promoting your newest products. Create funny, thoughtful, and engaging content that will inspire your followers to like, comment and share your posts.
Learn about popular hashtags for your niche and utilise them for driving traffic to your posts and gaining more followers. No advertising campaign can compare to a strong organic following.
If this is really challenging and you don’t have the resources to put into a social media following, you could consider working with influencers or sponsoring content (e.g. a podcast or a popular YouTube channel).
Recommended reading:
Media Impact Value: How to Measure the ROI of Influencer Campaigns
Identify & create brand advocates
Speaking of influencers, a similar strategy that might have a smaller, but more genuine impact is by working with brand advocates. These are consumers that really love your products and can have an influence on your customer base.
This concept overlaps into affiliate marketing, which gives consumers the opportunity to promote your products and be rewarded for it. Normally, this is in reference to content creators who promote the real-life use of your products. By linking to your product pages, they will get a small percentage of the sale.
Source: Shutterstock/Carlos Yudica
Similarly, to influencer marketing, if these affiliate marketers have a large following (or even simply make one popular video), this could drive a lot of traffic to your website and inspire loads of sales. When customers benefit financially from promoting your products, there’s a good chance they’ll purchase more products in order to further test them and potentially promote them as well.
Likewise, you might combine the previously mentioned loyalty programme with a referral programme – and this will drive repeat business as well as new business. By rewarding loyal customers for their word-of-mouth advertising, there’s a good chance they can drive shoppers to your business.
Analytics & statistics for repeat customers
As we mentioned in the top of the article, there are some advanced statistics that will improve as a result of increased repeat customers. We’ll also look at a few key performance indicators (KPIs) that show off the fruits of your labour.
Repeat Customer Rate
The first KPI you’ll want to look at and continue to keep track of is your repeat customer rate. You can get this number by calculating the following:
Repeat customer rate = Number of customer who made a second purchase with a certain time period/ total number of customers in the same time period
For example, if you had 1,000 customers over a one year period and 400 of them were customers who made a second purchase, the repeat customer rate would be 40%, as seen in the calculation below:
Repeat customer rate = 400/1,000 = 40%
It’s important to keep in mind that there is no ideal number to reach other than the one you set yourself. However, if you’re looking for a number as a measuring stick, a 50% rate would generally be considered great, while anything from the 20-40% range would also be considered very good.
By tracking this number on a monthly basis, for example, you can see how much your efforts are paying off.
Average Order Value (AOV)
Your average order value is another number to pay attention to.
Repeat customers tend to spend more money with your business over time, but they also spend more per order. In fact, 67% more!
This makes sense since customers who come back have already tested the waters. They’ve had a good experience and are more willing to put more items into their baskets. So, as your repeat customer rate increases, your AOV should increase as well.
Customer Lifetime Value (CLV)
This customer lifetime value (CLV) indicates how much any given customer will spend in your shop over the length of your business relationship. To calculate this, you simply take the average order value and multiply it by the average number of orders you receive from your customers.
CLV = AOV * the average number of orders per customer
Ideally, if your efforts are paying off, all the factors (AOV and average order number) will go up, thus increasing your CLV.
Customer Acquisition Costs (CAC)
Another factor to keep an eye on is your customer acquisition cost (CAC). Just as the name sounds, your customer acquisition number will indicate how much you’re paying to acquire your new customers.
The CAC is calculated by adding the marketing expenses and the sales expenses and dividing it by the number of new customers acquired.
CAC = (marketing + sales expenses)/# of new customers acquired
As the percentage of your revenue from repeat business increases, your customer lifetime value goes up, and your CACs should consequentially go down.
Of course, this isn’t written in stone. Acquiring new customers may still become more costly depending on the campaigns you run, but as your customer lifetime value goes up, you’ll be getting more out of those new customers, thus using your CAC spend more effective.
Conclusion
It simply makes sense to invest in building loyalty among your customers. By listening to your customers, providing a great customer experience, and using your marketing budget wisely, you can see your repeat business grow and turn your business into a brand with a loyal following.
