How To Turn First-Time Buyers Into Repeat Customers On Shopify
Oct 7, 2024
How To Turn First-Time Buyers Into Repeat Customers On Shopify
Most retailers wrongly assume that their job ends after a purchase. But its precisely where it begins!
Retailers put effort into and spend a lot of money to get a customer, which can cost 5 to 25 times more if they repeat the same practice. It is 67% cheaper to keep first-time buyers happy than to acquire new customers. Also, 8% of repeat buyers generate 40% of an ecommerce store’s revenue.
So, how do you increase customer repeat rate?
In today’s blog post, we will share actionable Shopify retention marketing strategies and will show you how referral marketing by duo helps you boost repeat purchases on Shopify!
Let’s get into the details and learn everything!
Understanding Customer Retention and Its Importance
To run a successful business on Shopify, you must ensure your customers are satisfied and return to you for more. And this is what customer retention does. Customer retention creates customer loyalty, which pays back as repeat purchases.
Though it takes effort and time, it's well worth it. So, before learning the customer retention strategies for ecommerce, let’s first understand here why customer retention matters so much:
Why Customer Retention Matters
It is easier to retain customers than acquire new ones. Also, returning customers spend more and buy more often. With a 5% increase in customer retention, revenue increases by 25% to 95%.
The benefits of customer retention do not end here. There are a few other reasons why customer retention is so critical for your Shopify store’s growth:
Lower Acquisition Costs:
The cost to acquire new customers depends on marketing, discounts, and advertisement campaigns that you run to target non-existing customers. Over the years, businesses have witnessed customer acquisition costs rise (up to 50% in some cases). For example, the average advertisement cost on Amazon has increased by 30%, from $0.93 per click to $1.20.
On the other end, customer retention is less costly as you already have the data of your existing customers that you need. The data shows that acquiring new customers is 5 to 6 times more expensive than retaining existing customers. That's why most businesses now focus on customer retention.
Loyalty:
Loyalty means that you will offer them more, and they will reward you by shopping more and more frequently (31% more than new customers). They keep coming back because they have learned the value of your services or products. Also, existing customers are 50% more likely to try new products than new customers. Resultantly, it increases the increase average order value Shopify.
Referrals:
Free advertisement is another benefit of customer retention. When customers are happy with your products, they spread positive words about you and refer your products to those they know. It can be through social media or old-fashioned word-of-mouth. Resultantly, you get new customers at no cost.
About 92% of customers trust the recommendations from their friends and family. The other plus is that referred customers are less likely to leave and stay more loyal to your brand. Also, they bring you higher profit margins (25%).
Way For Innovations:
When you have built a strong customer base, your business can easily pursue new product development. This also lets you experiment with your brand and marketing strategies. But don't change things too much; ensure that what your existing customers appreciate and like remains. A sudden and large number of changes can take your loyal customers away.
The Cost of Losing Customers
The churn rate is the percentage of customers who leave within a specific time period. It has a direct impact on a business's finances. On average, a business loses $243 with every customer it loses.
A higher churn rate means you will witness a significant drop in the revenue in terms of recurring income from the current buyers and potential revenue from new buyers. Also, you will have to spend more money on acquiring new customers. You can calculate the churn rate by using the following formula:
A lower churn rate is better for your business's stability and sustainability. It means keeping loyal customers and increasing your repeat purchase rate. Fortunately, 67% of churn can be prevented if you resolve the customer's issue at the first interaction.
Besides that, there are various ways to reduce customer churn in Shopify. For example, you can:
Understanding why customers leave will help you reduce the customer churn rate and improve customer retention in Shopify. For this purpose, you can implement feedback mechanisms like customer interviews and surveys and analyze customer support interactions.
Implementing the Shopify customer loyalty strategies can be an impactful and powerful approach to reducing customer churn rates. Also, it will foster long-term customer loyalty.
Remember that exceptional customer service is key to retaining existing customers and reducing the churn rate.
The balance between value and price greatly affects customer churn rate. So, you should analyze it to identify price sensitivity. Optimizing the pricing strategies will help retain the customers.
Simplify the return process and facilitate hassle-free returns. It will help boost customer happiness. For instance, you can offer a no-questions-asked return policy with free shipping for 30 days. It will result in greater customer loyalty and reduce the customer churn rate.
Effective Strategies to Turn First-Time Buyers into Repeat Customers
When retailers launch an e-commerce store, they focus on acquiring customers, which makes sense. After all, if nobody buys your products, how will you make money? As time passes, retailers start spending more on acquisition, which makes no sense.
Cash does not only come from new customers. Retained customers, which make up only 8% of your customer base, generate more revenue than new customers. So, implementing effective strategies to turn your new buyers into repeat customers is worthwhile. Let's see here which strategies can be helpful in this regard:
Implement Post-Purchase Marketing Tactics
The loyal customers account for almost half of a store's total revenue. You can also turn first-time buyers into your repeat and loyal customers by implementing post-purchase strategies like:
Post-Purchase Emails
Most retailers use email to engage the audience who has joined the mailing list without making any purchases. It can also be a great tool for Shopify post-purchase customer engagement and for getting multiple purchases from one-time customers.
You should carefully strategize the Shopify email marketing for repeat customers. Do not forget to add about new product launches, upcoming sales or promotions, and exclusive discounts.
Data shows that personalized emails have higher open rates than non-personalized ones. So, personalize the email campaigns based on your customer data. It will generate repeat business with multiple loyal customers and improve customer retention.
Anthropologie, for example, which uses different personalized email strategies to stay in touch with its customers. Likewise, Lululemon used to send emails to customers regularly to inform them about new products and keep them engaged.
In addition, LaCkore Couture uses previous purchase data to suggest relevant products and offers to customers. The brand does not send generic emails. Instead, it segments customers according to past purchasing behavior and shares content that resonates with them.
For example, if a customer has purchased a birthstone pendant, the brand will send emails showcasing the matching earrings or rings. This personalization simultaneously entices and educates the customer, increasing the repeat purchase rate.
Personalized Recommendations
Data reveals that 37% of customers prefer receiving personalized recommendations based on their preferences. Also, personalized product recommendation drives customer satisfaction, enhance the shopping experience, foster a sense of community, and increase repeat purchases. Consequently, it has become one of the most powerful post-purchase marketing Shopify.
But, to achieve these results and give your customers personalized support, leverage the advanced algorithms and customer data. For example, you can analyze customer behavior, search queries, browsing behavior, and previous purchases.
The acquired information will help you understand the customer's interests and references. As a result, you can suggest products that align with their needs. You can add these personalized recommendations at different touchpoints, including shopping carts, product pages, and email campaigns.
Follow-Up Surveys
The follow-up survey includes a few questions and is shown to the buyer immediately after purchase. It usually appears on the "thank you" page. It can help you gather valuable insight into:
The shopping experience of customers
Strategies to improve the conversion rate of your store
Marketing channels that are driving the conversions for you
Later on, you can use this data to:
Improve the shopping experience
Personalize marketing campaigns
Boost the store’s conversion rate
Design the products that your audience will love to buy
Are you thinking of the questions that can be included in such surveys? If so, here are a few that you can include in your follow-up surveys:
Is there any part of the website that you find difficult?
What almost prevents you from buying today?
Was there anything about the shopping experience that you found helpful?
When is your birthday?
Who did you purchase for?
What is your gender?
Why did you purchase from our store?
Let's take the example of Ably Apparel, a stain and order-resistant apparel store. The store always asks its customers why they chose a specific item. The question is positioned under the product purchased in their order summary.
It helps the store obtain valuable information about specific products, letting them know how they perform. It also helps them design more clothes according to their customers' preferences.
Leverage Upselling and Cross-Selling Techniques
Upselling and cross-selling are powerful strategies that can boost revenue by up to 43%. Shopify upsell and cross-sell strategies also increase customer retention, offer buyers a holistic shopping experience, and build a loyal customer base. But how do these two approaches achieve this?
Cross-selling encourages the buyers to purchase the complimentary products and their original purchases. For example, when a customer buys a computer, you can invite the buyer to purchase a printer.
In cross-selling, the suggested products are not add-ons or upgrades to the initial product. However, interrelated products are recommended, which are more useful when used alongside the original purchase.
On the other hand, upselling sells a higher product to the buyers. You can suggest premium services or ask for an upgrade for your customers. For example, if the buyers purchase the MacBook (worth $1500), you can encourage them to get a better processor or higher storage at the discounted price ($1800).
Both strategies increase Shopify's average order value and motivate customers to return for complementary products and higher purchases.
Utilize Referral Marketing to Drive Repeat Purchases
Referral marketing Shopify is a powerful strategy that encourages existing customers to become your brand advocates and promote your products within their network. The advantages of referral marketing include social proof and word-of-mouth marketing. Both of these generate more brand awareness and let you boost repeat purchases on Shopify.
The best way to make your referral marketing strategy effective is to ask for referrals at the right time and offer strategic incentives like instant cashback.
Without a referral program, your customers will always forget to recommend your products to others regardless of how happy and satisfied they are with you. So, how can you create a referral program where the customer keeps generating valuable word-of-mouth for you and turn new customers into repeat buyers Shopify? Well, there's no need to stress when DUO can get everything done for you!
DUO can let you easily set up the post-purchase referral program with cashback incentives, which outperform traditional referral incentives. After each purchase, your customers will get an automatically generated unique discount code to share with others. Remember that these codes will have a limited validity period. When the code is redeemed, your existing customers will receive instant cashback.
This unique approach increases word-of-mouth marketing by targeting existing customers. In return, it leads to more repeat purchases and loyal customers, contributing to your long-term profitability and success.
Build a Strong Loyalty Program
About 79% of consumers do business with those brands that offer a loyalty program. So, through loyalty programs for Shopify stores, you can reward loyal buyers with free offers, discounts, and other incentives to encourage repeat purchases. When deciding on incentives, ensure that rewards are easy to achieve but valuable enough to encourage multiple transactions.
Loyalty programs can be point-based, paid, or tiered. The most common are point-based programs, where customers accumulate and redeem points later to earn rewards. Tiered loyalty programs offer different rewards to customers depending on their ranks, while paid programs offer specific perks to buyers for a participation fee.
If you want to make your loyalty program one of the best Shopify customer loyalty strategies, integrate referral rewards like instant cashback. Instant cashback assures quick gratification, acknowledgment, and appreciation. But buyers must wait a long time for point-based or other rewards.
Personalize Customer Interactions
One of the crucial elements to retain customers is personalization. So, you must analyze the customer data to personalize your communication, product suggestions, and offers. In this way, you can show your customers that you know them and that they are valuable.
It will increase their likelihood of returning and boost Shopify conversion rates significantly. Below are some tips for personalizing customer interactions:
Take advantage of advanced technologies that foster customer data feedback and insights. Then, you can use the customer's unique data to boost personalization.
Identify the key customer segments and their needs, then offer them products or services per their preferences.
Offer a holistic and individualized experience to your customers
Create compelling content that can enhance customer experience
You can use the CRM for personalized interactions
Try to cater to the different needs of your customers at each stage of their journey.
Implementing and Measuring the Success of Your Strategies
Implementation of Shopify retention marketing strategies would not be enough. Evaluating these approaches will help you find your efforts' success and highlight the necessary adjustments to ensure long-term success.
Let’s see in detail here how to implement and measure the success of your marketing strategies:
Tools and Apps to Support Your Retention Efforts
Below, you can find the best Shopify apps for customer retention, loyalty programs, and referral marketing:
RetentionX
RetentionX can be easily integrated with the Shopify store and used to get free customer analytics. It can also be used to learn about the average order value, customer lifetime value, etc. Store owners can also get reports showing why customers leave the store.
Later, this data can be used to improve customer retention. You can also use this app to send personalized emails based on purchase history or customer activity.
Bon Loyalty:
Bon Loyalty is a user-friendly and multifunctional application that lets you attract a global loyal customer base. The app lets you create an automated widget and nine different types of emails (in over 250 languages). Buyers can earn points for any purchase by referring new customers.
Aside from that, VIP tiers let customers get more and more as long as they stay with you. It is a great feature for building customer satisfaction. A great version is also available for free.
Smile:
Smile app can help you to boost new and repeat purchases. The application offers many loyalty features, including rewards, goals, points, etc. Smile is customizable and lets you build loyalty programs that fit your preferences and brand. This application lets you use completely editable panels and VIP reward tiers.
You can also incentivize your most valuable customers to buy more. Store owners can also benefit from automated on-site engagement reminders. The application can be integrated with popular Shopify applications. You can also use a great version of Smile without paying any cost.
Tracking Key Metrics and KPIs
Following are the different key metrics that you can track to measure the success of your marketing strategies:
Repeat Purchase Rate
The repeat purchase ratio is the purchase of buyers who return to you for repeat purchases. A higher repeat purchase rate shows customer loyalty and is often used by marketing teams to assess the impact of an implemented customer retention strategy.
Customer Lifetime Value
Customer lifetime value tells you how much revenue has been generated from a single customer. Seeing an increase customer lifetime value Shopify indicates that you are running a successful marketing strategy. But, a shrinking CLV suggests that you either lose the customer or have captured low-value buyers.
You can calculate the customer lifetime value by using the following formula:
Customer Lifetime Value = Customer Value X Average Customer Lifespan
While Customer Value = Average Purchase Value X Average Number Of Purchases
Referral Performance
You can use the referral rate to measure the effectiveness and track the success of your referral strategies. You must know the number of referral purchases over a specific period to calculate the referral rate. Once you have that, divide it by the total number of purchases within the same period and get the referral rate.
A referral rate of 2% is considered healthy and shows effective ecommerce retention techniques Shopify. The global average referral rate across different industries is 2.35%. Feel confident if your referral rate is higher than this or near it. It shows that your referral program is on track and you follow the best Shopify repeat customer tactics.
Adjusting Your Strategy Based on Data
Understanding the shortcomings of your customer retention is crucial for the long-term success of your business. So, once you have launched the marketing strategies, the next step is to dive into the performance data. It will help you know what’s working and what’s not.
You can gain insights into customer behavior, pain points, and preferences. This information can be invaluable in improving customer retention on Shopify. Remember that customer retention is ongoing, and customer preferences change over time. So, you will have to adapt the marketing strategies accordingly, which is how to increase sales on Shopify store.
Conclusion: Transforming First-Time Buyers into Loyal Customers
A study on customer retention found that 80% of revenue is generated by 20% of the existing customers. So, in this crowded marketplace where the cost of acquiring new customers continues to climb, why not use effective strategies like post-purchase marketing, upselling, loyalty programs, and referral marketing with DUO to boost repeat purchases on Shopify?
However, implementing these strategies would not be enough. You will have to track KPIs and use apps like Smile, RetentionX, and Bon Loyalty to measure the effectiveness of these practices and pinpoint the areas of improvement. Remember that constant evaluation and improvement will help you stay ahead of the competition!
