Customer Retention Strategies To Expand Your E-commerce Sales

New customers are great, but existing ones are better. You'll spend less money wooing your current customers, and they're more likely to have bigger, pricier shopping carts, so building customer loyalty should be a priority for your company.

In this episode of The E-commerce Revolution Podcast, Ramin Ramhormozi and Jack Johnson discuss the importance of having a loyalty program. Jack Johnson is the Technology Partnerships Manager at LoyaltyLion, a data-driven engagement and online loyalty platform for e-commerce. He is an expert in loyalty marketing and sales strategy.

The Tie Between Customer Retention and Customer Lifetime Value

Ramin: So tell me, why do e-commerce merchants need to make loyalty and retention a priority in their business?

Jack: There are so many reasons. Loyalty and retention are often overlooked in this landscape by necessity when you start an e-commerce business acquisition. But in all the e-commerce businesses that I've worked in, acquisition can be challenging.

And at times, it can be unreliable. So we have seen that recently in the form of iOS updates, in the A/B testability of campaigns. And also, the fact that you are often using paid spend at amounts which can fluctuate pretty crazily in contrast to all of that retention marketing which is relatively affordable.

On average, it's five times less expensive to retain an existing customer than to engage a new customer, and often it's overlooked.

Strategies That Guide a New Customer Towards a Second Purchase

Ramin: So, you know, one thing that interests me is this one-time customer. We've spent money to get that customer. They've purchased from us one time. Tell me how LoyaltyLion helps retain that customer.

Jack: A few different strategies can be defined with different customer psychologies. When a customer makes a purchase with LoyaltyLion, even if they are not yet a member of the loyalty program, they earn points.

So one of the tactics we see a lot of our customers doing is after that first purchase has been made, they will set up an automated loyalty email, which sends an email to the customer and says, you've just unpacked, don't forget to set up an account.

That's a great way of convincing a customer to come back to make a second purchase.

Turn a New Black Friday Customer Into a Returning Customer

Ramin: Let's say the first time you get that customer is on Black Friday or Cyber Monday, and you need to turn them into a long-term customer. What are some of the processes that you recommend?

Jack: You touched on something really important: Black Friday, Cyber Monday, and the holiday period are huge acquisition moments for all brands.

You want to have customer retention and other marketing strategies for that, so you're ready to collect that information when it comes in and incentivize those customers when they come in and make a purchase in terms of what we are recommending.

We're noticing in this space that these percentage-off deals, which for so many years have been the status quo around Black Friday and Cyber Monday, aren't as effective as you might think.

We did some research recently. It does appear that customers are quite tech-savvy, and they understand that it is a relatively short, non-individualized experience where you can get some percentage off an order.

Customer Retention Strategies Help Set You Apart in a Growing Marketplace

Ramin: Where do you see loyalty going in five years? What happens to loyalty and retention? What does the software look like five years from now?

Jack: The current challenges in acquisition aren't going away anytime soon. I think that acquisition is going to become more difficult. We see the marketplace growing 14% year on year, and COVID was like seven years all at once.

So we know that there's going to be more businesses trying to acquire a finite amount of customers. That's always going to be a challenge. So for me, retention is going to be a bigger piece of the puzzle for e-commerce merchants, and they're going to have to prioritize it.