Existing customers convert 73.72% more often and spend 16.15% more AOV than new customers.
As we'll see, reducing churn in eCommerce depends on driving repeat purchases. We do that through re-engagement, customer relationship marketing, and offering compelling, personalized offers.
To skip straight to the tactics, click here. Otherwise, let's begin!
Tips on How to Properly Measure Churn
Unfortunately, there is no consensus way to measure churn.
And, the truth is, the "best" way to measure churn will be specific to your company. Every eCommerce store's churn will depend on the product mix, industry, business model, and target customers. A subscription driven business model will have different characteristics than a traditional store.
Likewise, a store focused on consumables will have a different purchase frequency compared to a furniture store.
Still, there are best practices to measure churn.
Segment churn: don't rely on one metric
Your customers behave differently throughout the customer lifecycle. As such, having a single blended metric is less revealing than one that measures short term, medium, and long term retention.
Below are a few tips on how to segment your churn metrics.
Use revenue as the primary way to measure churn
Another guiding principal for measuring churn is focus on revenue.
The default way of measuring churn is via number of customers. It makes sense. When you think of retention, you think of retaining a customer.
The problem with using users is it is a binary outcome. Either a user is retained, or he is not.
The truth is, revenues and profits matter. If a customer is "retained" but only worth $5/year, retention becomes a misleading metric.
For most eCommerce stores, return on investment is a more powerful KPI.
Using revenue as the primary metric for churn gives you insight into how your other engagement efforts are translating into purchases.
Define an "at-risk" segment
The purpose of measuring churn is to reduce it.
And, while win-back campaigns are absolutely necessary, they aren't the only tool you have. Most retention strategies and tactics are more effective when the customer is still willing to listen.
This is where effective database marketing comes in. Being able to identify an at-risk segment and tailoring specific campaigns to re-engage this audience is the best way to decrease churn.
How to lower churn with proven strategies.
Once you have your retention and churn metrics in place, the next step is to design strategies to lower churn rate.
Honestly, there are a multitude of approaches that can work. Successfully combating churn in eCommerce really boils down to repeat purchase.
Ultimately, success will depend on how many ways you have permission to communicate with your customers, and your ability to create compelling, personalized offers to them.
1. Capture traffic with welcome pop-ups
Gaining permission to communicate with customers is the primary source of low churn for eCommerce stores.
Welcome pop-ups and offers remain a performing tactic for gaining permission.
Why do welcome offers work so well?
Fist, welcome offers recognize that the visitor doesn't have a relationship with you. Ecommerce stores need to work to de-risk the first transaction, and the simplest way to do that is via an offer.
Second, even despite the offer, the reality is most of the traffic you receive won't buy on the first visit.
A welcome pop-up gives you a chance beyond retargeting campaigns to followup and close the deal.
2. Crete effective browse and cart abandonment campaigns
Likewise, the majority of new and returning customers won't convert on repeat visits.
As we shared in our guide on browse abandonment,
Developing an advanced, browse and cart abandonment campaign is essential in maximizing other tactics in this list, such as post-purchase and loyalty programs.
3. Setup advanced reactivation email campaigns
A reactivation campaign is simply a message to re-engage an inactive customer.
Note that a reactivation campaign can be executed across channels. We've seen success on FB Messenger, direct messages on social, and push notifications.
However, email remains the most robust channel for customer reactivation. (To see why, check out our analysis on email marketing statistics here.)
Advanced Reactivation Campaigns: See how Barilliance combines online and offline data, automatic segmentation, and triggered behavioral emails to create advanced reactivation campaigns. Request a demo here.
4. Design a post-purchase strategy
Customers are most engaged with your brand immediately after purchase.
Defining these segments, through RFM analysis or other behavioral segmentation techniques, is the first step.
Once you identify first time buyers, you want to design a post-purchase strategy. The goal is to gain permission for future communication and prompt repeat sales.
We covered how e.l.f. use's their post-purchase campaign as part of their retention strategy here.
Below is their first email, sent after you complete a purchase.
Above, e.l.f. uses a variety of retention tactics to reduce churn embedded in their post-purchase email. Tactics include referral incentives, an invitation to join a loyalty program, and various offers such as Free Shipping.
Notice how they combine transactional confirmation and order tracking with invitations to save money on future purchases.
5. Craft a welcome sequence
Reducing churn depends on effective communication.
This is most important right after they sign-up.
In our guide on how to create a welcome email series that sells, we showcased how Sephora uses welcome sequences to enroll customers into loyalty programs and prompt future sales.
6. Enrich your loyalty program
Loyalty programs have proliferated across eCommerce stores as a way to reduce churn.
In fact, both of the previous examples, e.l.f. and Sephora, employ loyalty programs to spur repeat purchases.
The reality is, your loyalty program will compete against others. So, how can you make your program preferable to others?
To me, the most impressive loyalty program is Amazon's Prime Membership.
You can see how varied and extensive Amazon Prime's membership is here. In fact, it is instructive to see how Amazon blends their omni-channel strategy into their loyalty program.
And more and more and more.
In fact, going through Prime membership benefits makes it seem like an obvious choice. And, the best part for Amazon, is the high price ($119/year) and free shipping incentivizes Prime Members to shop at Amazon as often as possible.
Reducing churn is fundamental to eCommerce success.
Lowering churn depends on your ability to re-engage customers. Capitalize on personalization technology and triggered messages to create relevant, contextual offers.
To see if Barilliance is the right personalization partner for you, request a demo here.