The retention rate (or loyalty rate) of your e-commerce, that is to say your ability to retain your customers, is a crucial metric of your business. And this for two reasons. Already because it allows you to know how much you retain (or retain) your customers. However, an existing customer is more profitable 4 tips to improve an average prospect (we will come back to why this is the case). But also because the retention rate is indirectly a way of knowing customer satisfaction, which, when it is good, ensures the sustainability of your business.
But before we unveil our 4 key strategies for increasing your retention rate, let’s first tackle the basics needed to do so. So, we will explain in detail what the retention rate is and how to calculate it.
What you will discover in this article: The retention rate refers to the proportion of customers who remain in a given period. It is the ability of your e-commerce to retain its customers after their first purchase. In other words, the Macedonia Email List rate is a measure of the loyalty of your customers. The retention rate is opposed to the attrition rate which is the calculation of the number of lost customers during a given period. But why invest in increasing your customer retention rate? “The answer can be summed up in a few words: acquiring a new customer costs on average 7 times more than retaining one.
How do you know if your retention rate is good?
Additionally, a loyal customer tends to spend more than a new customer. Another very interesting fact about the retention rate: An existing customer has a 60-70% chance of buying from you again. On the other hand, there’s only a 5-20% chance that one of your prospects will buy from you. A satisfied customer (and therefore often a loyal customer) is more likely to get word of mouth, or even become a true ambassador for your brand at best. So here’s why it’s crucial to increase the retention of your e-commerce customers. But to increase a retention rate, you still need to know how to calculate it. So let’s see how to calculate the retention rate : Retention
A little too abstract? Let’s see an example to make the retention rate more understandable. Say you want to measure the retention rate of your online store over a quarter. Retention rate: [(end customers – new customers) / initial customers] x 100 Ok, we have some concrete, we have your famous retention rate. You retained (or retained) 33.3% of your customers during the quarter. How do you know if your retention rate is good? In fact, it is relative. A good retention rate depends on two main things. Obviously, the ideal would be to reach 100%, but that is not realistic. There will always be customers who don’t come back, and that’s okay. So let’s come back to the important influencing factors to look at.
4 keys to improving your retention rate
We were just talking about your sector. And for good reason. If you are in the food industry, for example, you can expect a retention rate greater than the 33.3% we saw in the example because it is a frequent purchase. On the other hand, if you are in household appliances for example, such a retention rate can be a good number. Finding the retention rate in your sector and / or that of your competitors is not necessarily easy, but some organizations and associations publish reports with this kind of information, such as that of the Windsor Circle. That being said, not all is settled if your retention rate is low relative to your industry.
The history of your retention rate You might be just getting started and haven’t yet put in place what it takes to increase it. Which brings us to our second criterion to determine if your retention rate is good: its evolution. Compare your retention rate with a previous period and see if it has increased or decreased. If it is increasing, clearly, you are doing something right even if it is not yet as high as you expected. Speaking of doing what it takes to increase your retention rate, let’s take a look at 4 keys to increasing your retention rate. How much does it cost to create an online store? La Fabrique du Net has developed a fast and efficient price estimation engine.