How to Increase Customer Retention

In this clip from our eLearning series, Allison explores different ways to increase customer retention. She explains why ecommerce brands can use customer data to their advantage when looking at strategies to increase customer retention. You'll also learn why consistent purchases from customers who are in the middle of the segmentation pyramid are highly valuable for customer retention efforts.

What is a good strategy to increase customer retention?

There are two types of customer retention. There's retention that you can see, and retention that you can't see. Let's talk about subscription-based products as an example. While it's easy to get visibility into how many customers are staying subscribed to your product or service, subscriptions also come with a downside. It's hard to know predict when somebody will fall off and unsubscribe from your service. This typically happens around renewal time when you aren't sure whether or not you customer will renew their subscription. As a result it can be hard to prevent customers from churning, and isn't a good example of retention that you can see.

Ecommerce brands have an advantage

Ecommerce retailers have an advantage when it comes to increasing customer retention. Each transaction that occurs online provides clarity into the wants and needs of your customers. This transactional nature forces brands to be more tuned in to their customer base.To increase customer retention, ecommerce brands should focus on customers that are in the middle of the customer segmentation pyramid of Customer Lifetime Value. This is because the middle group offers the most upside. A small increase in transactional cadence for this middle group can have a big impact on CLV even when the average oder value is lower.It makes sense for brands to want to have frequent, predictable, smaller transactions than a one-off medium to large transaction if they want to increase customer retention.