How to retain customers on your Shopify store

Why should you focus on increasing your customer retention?

Most companies focus more on acquisition than on retention. For a lot of them, that’s a mistake. Unless you’re just starting out, you should focus on retaining existing customers.

Various studies have shown that retaining customers could be anywhere from 5 to 25 times cheaper than acquiring new customers. To make this sweeter, customer retention actually helps you with customer acquisition since loyal customers are 4 times more likely than new customers to refer you to their friends and family. These loyal customers are also 7 times more likely to try your new offerings.‍

Which customer retention metrics should you focus on for your Shopify store?

There are many metrics that you could track to measure customer retention. Here are the most important ones:

1. Repeat purchase rate

This refers to the percentage of customers who made more than one purchase from your Shopify store during a specific time period out of the total number of customers who made purchases from your Shopify store during that time period.

You can use this formula to calculate your repeat purchase rate:

Repeat purchase rate = (Number of customers who made multiple purchases / total number of unique customers) x 100

2. Purchase frequency

The purchase frequency helps you figure out how often your customers make purchases from your store. Your purchase frequency could vary depending on your industry and the type of products that your store sells. For example, stores selling fast-moving consumer goods would have a very high purchase frequency while stores that sell consumer durables would have a low purchase frequency.

To calculate your average purchase frequency for a specific period, you can use this formula:

Average purchase frequency = Total number of purchases / Total number of unique customers‍

3. Average order value

Your average order value is the amount of money that your customers spend on every purchase that they make at your Shopify store. Your average order value could increase because of your customers buying more expensive items or even because of them buying multiple products (or many of one product) at one time.

A high average order value could be an indicator of good levels of customer retention because loyal customers would be the ones most open to spending a lot of money in a single order (they trust you) and new customers would be less likely to make very expensive purchases the very first time.

To calculate your average order value, divide your total revenue for a certain period by the number of unique orders you had during that period.

Average order value = Total revenue / Total number of orders‍

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4. Customer lifetime value

Your customer lifetime value is the amount of revenue that you will earn from a customer over the entire amount of time that they do business with you. If you increase your customer retention, you will end up increasing your customer lifetime value. There are many complex formulae that you could use to calculate your customer lifetime value, but let’s make it simple. Here’s the easiest, most straightforward formula that you could use.

Customer lifetime value = Average order value x Average purchase frequency x Average customer lifespan

Quick tip: Read this article to learn how to increase your customer lifetime value.

How to improve your customer retention on Shopify?

1. Respond to customer queries quickly

According to Forrester Research, 53% of customers end up abandoning their carts if they don’t get their questions answered instantly. And this isn’t just limited to new customers. Even if your customers have made purchases from your store earlier and they came back, they’re liable to abandon their cart and even stop doing business with you if you don’t answer their questions quickly.

That’s why you need to deploy an intelligent chatbot on your Shopify store. If you use an AI-powered Shopify chatbot from Engati, you can answer around 80% of your customer queries instantly, passing only the most complex questions on to live agents.

Now, speaking of those complex questions; you don’t want your customers to have to get on a phone call or start an email conversation to get the answers they’re looking for. Use Engati Live Chat to let your customers converse with your agents and have their questions answered over the same platform.

A Forrester study has shown that 44% of online shoppers believe that live chat is the best feature that an eCommerce website could have.‍

2. Have a better return policy

Making your return policy more lenient would cause your customers to trust you more. It’ll make them feel like your offerings must be high quality if you have such a great return policy. That trust will cause them to stick with you and keep doin business with you for a long time.

And if you’re afraid that such a return policy would cause customers to purchase your offerings, use them once and return them, thus making you actually lose money on shipping, you don’t need to worry about that.

What actually tends to happen is that such a policy would cause your customers to make more purchases, thinking that they can return them if they don’t like them. But, now the Endowment Effect kicks in, making them value these products more because they belong to them. The result? They just don’t end up returning their purchases. A more lenient return policy could thus help you increase your sales as well as your customer retention.‍

3. Use Shopify Analytics

Shopify analytics helps you understand your sales trends and shows you who your recurring customers are and what they are buying. It even shows you what items they are buying together, which could allow you to bundle those items and offer discounts on them.

It could help you understand your customers’ interests and offer products that match what they are looking for, thus keeping them coming back for more.‍

4. Personalize product recommendations

You can improve your customer experience by displaying the products that your customers would be most interested in across your Shopify store. Displaying product recommendations based on your customers’ preferences would make it seem like your catalog matches their needs and tastes. It also creates a better customer experience because they don’t have to spend their time hunting for the products that they are interested in.

You could even set up product recommendations that are based on how they have historically browsed through your store. Using personalized recommendations makes life easier for your customers and shows that you have what they need, so they won’t need to look in other places and they’ll keep coming back to your store.

5. Engage your customers in their language

If you can’t engage and support your customers in their language, they aren’t going to stick with you. They just won’t trust you as much if you only provide support in English while they speak other languages. They’ll look at you as an outsider and that’s not good for customer retention.

Deploying an Engati chatbot on your Shopify store allows you to engage your customers across multiple regions in 50+ languages, helping you make all your customers feel comfortable doing business with you and more inclined to stay loyal.

6. Leverage customer accounts

Creating an account would subconsciously make your customers think that they are going to make more purchases from your store in the future. That’s essentially them justifying the act of making an account, even if they didn’t initially intend to make future purchases from you.

Creating an account would certainly make the buying process much easier for your customers, but you might not want to force customers to make one, that could just be annoying and cause new customers to abandon purchases.

You want to offer guest checkout options but still incentivize customers to create accounts on your store.‍

7. Create a loyalty program

A loyalty program is a time-tested way to increase your customer retention. The Harvard Business Review even shows that companies with strong loyalty programs tend to grow their revenues 2.5x faster than their competitors.

You can find apps to build loyalty programs on the Shopify App Store, and you can even use your Engati chatbot to run your loyalty program.‍

8. Allow customers to subscribe to products

If you sell products that your customers would typically need to purchase at regular intervals, you don’t want to give them the opportunity to discover your competitors the next time they need to make a purchase.

Allow them to subscribe to those products and give them a discount for doing that. This enables you to earn recurring revenue and eliminates the effort your customers have to make to reorder, along with the chance of them selecting a competitor.‍

9. Create a feedback loop

After your customers make a purchase, you want to lay the foundation for a good relationship by asking them for feedback and even requesting a review. Asking for feedback (and acting on it) shows your customers that you care about their opinions and makes them want to stick with you longer.

Requesting a review is very effective because when they do leave a positive review they are essentially getting conditioned to think positively about your store. Thinking negatively would create dissonance in their mind and it just wouldn’t feel right. They’ll essentially be justifying the act of leaving a positive review by telling themselves that they do like your store and your offerings.‍

10. Go omnichannel

An omnichannel approach makes life easier for your customers and allows you to reach them on all the channels they’re hanging out on. Deploying an omnichannel Engati chatbot for your Shopify store even helps you reduce customer effort because they’ll be able to get support, check their order status, and do much more directly over WhatsApp, Facebook Messenger, Telegram, Instagram, and 10+ other channels instead of having to visit and navigate through your website.‍

11. Wish them on occasions

If you collected information about your customers like their date of birth when they set up an account with you, you could send them a message to wish them, along with a gift card or even a small gift for your most loyal, high-value customers.

Even if you don’t have that information, you could still wish them on festive occasions and send them gift cards or gifts, thus making them feel better about you.‍

12. Improve your user experience

A bad user experience would cause you to lose customers. Your store should be easy to use and should require as little effort as possible for your customers to make purchases. Look at analytics and heat maps to identify issues with your store and fix them.

When you design your Shopify store, make sure not to stray too far away from the commonly accepted web conventions, doing that could make your website feel less intuitive. If certain buttons and other features are not where your customers would intuitively expect them to be, your customers might get confused and frustrated. You don’t want that to happen.

Another way to improve your user experience is to deploy an Engati chatbot on your Shopify store so that your customers don’t have to hunt through your entire website to find the information they need. They can get all the information they’re looking for — from other details to store policies — in one place, by simply asking a question.

This article about “How to retain customers on your Shopify store” was originally published in Engati blogs.

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