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retention marketing

Customer Retention Marketing: How 6 ecommerce Brands are crushing it

Improving your retention rate is a massive opportunity. This article breaks down successful retention strategies, including examples from Starbucks, Chase, Instacart, and more.

An often cited study by Bain & Company (in conjunction with Harvard Business School) has said that a 5% increase in retention can improve profitability by as much as 55%.

Implementing the lessons learned from these top retention marketing strategies will increase profitability in three major ways:

  • Increases LTV of customer - As you increase the frequency and amount that each customer spends with you, you are directly impacting the LTV and profitability of each customer.
  • Enables new sales channels - by increasing the LTV of your average customer, you can afford to spend more on customer acquisition.
  • Increases AOVThis study by Adobe shows that repeat customers make up 40% of sales, while only representing 8% of customers. 

Click here to skip straight to the retention marketing examples. Or, read on to first get an overview of how to construct an effective retention campaign.

What is customer retention strategy? 

Customer retention strategy describes the activities used to transform customers into repeat customers.

In our own studies on customer retention, we've found eCommerce visitors who come back after making a purchase are

  • Added items to carts 65.16% more than first time visitors
  • Converted 73.72% more than first time visitors
  • Spent 16.15% more per transaction

Other studies confirm the significance of improving customer retention.

  • A 5% increase in customer retention can increase profits by 25% (Bain & Company)
  • 5-25x more expensive to acquire a new customer than retaining existing ones (Harvard Business School)
  • "Nearly 50 percent of customers say they’ve left a brand to which they were loyal to go to a competitor that is better at meeting their needs" (InMoment)

Advanced customer retention strategies for eCommerce stores

There are numerous approaches to ecommerce retention marketing strategies. Below, we outline the best performing campaigns used by successful ecommerce companies. 

In the next section, we illustrate these customer retention strategies with examples. 

1. Reactivation based customer retention strategy campaigns

Reactivation retention campaigns target customer segments who are no longer engaging with your brand. 

Like all retention strategies, to be successful, a reactivation campaign must first identify a specific segment of customers that are about to leave or that have already left. Further, brands need to determine why they are leaving.

With this information, you can craft a relevant offer to bring "reactivate" the customer. 

One simple example is to set up a rule that sends an email based on recency of visit.

In this example, the segment is “Customers who haven’t visited the site in x days.”. The copy and series of messages should be directly tied to why your customer stopped ordering from you.

Reactivation customer retention tactics

Return Path conducted a great study on best practices for reactivation campaigns. Some findings include:

  • Specific Dollar Incentives - Specific dollar incentives in the subject line are almost 2x successful as % off discounts (despite most emails using % incentives)
  • Recency Matters - Reactivation campaigns are more effective the sooner they are launched. Emails sent to “long inactive” customers had a meager 1.8% read rate compared to 12% average.

Above, Sephora uses their loyalty program to bring customers back. Here we see a variety of dollar incentives combined with urgency in the form a strict deadline to use the coupon code.

2. Advocacy based customer retention strategy campaigns

Advocacy marketing focuses on getting current customers to talk about your product to their friends or network. It depends on capitalizing on positive experiences to not only gain customers, but increase retention.

Advocacy customer retention tactics

  • Two sided referral programs - Give a reward to the person making a referral. The reward is typically tied to a repeat purchase or continued use of the product. 
  • "Refer a friend" - A more simple approach, this referral program encourages repeat purchase through consistency bias. By openly endorsing your brand, customers are more likely to continue using your service. 
  • Social endorsements - Likewise, encouraging customers to make open endorsements of your product is another way to tap into a consistency bias and increase customer retention. 

Above, Starbucks presents a unique advocacy retention program. Their offer is great, giving previous customers an easy way to gift a Valentines to someone and simultaneously removing common hurdles such as convenience and shipping costs.

3. Deal based customer retention strategy campaigns

Deals have long been used in retail to prompt repeat purchases.dko

What ecommerce can take advantage of is the zero marginal cost it takes to communicate with a customer once you have permission to speak to her. 

This unlocks a number of deal based retention strategies, allowing brands to communicate at a much higher frequency than before possible. 

Deal based customer retention tactics

Ultimately, there are two major categories of deals that brands can utilize.

Discounts - Offer products at a reduced price.
Exclusivity - Offer products not normally carried to a particular group.

Above, Mint Julep embeds a deal based customer retention strategy in their checkout flow. In the process gain permission to contact the customer via text.

4. Subscription based customer retention strategy campaigns

Premium memberships are not a new concept.

The most famous example is Amazon Prime. Amazon offers free 2 day shipping (in addition to unlimited streaming through Prime Video as well as the ability to “borrow” books on the Kindle platform) in exchange for a yearly membership fee.

Some estimates say that the average Prime member spends 2x as much as non-prime members and Amazon as a whole has made it the center point of their omnichannel strategy.

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.

Customer Retention Marketing Examples

1. TheRealReal retention campaign

The RealReal formalized their advocacy marketing with their “Refer a Friend” offer. The program is a classic double sided referral program, with a number of nice touches to maximize conversions in the program.

  • Monetary Incentive for Referrer - TheRealReal highlights the main benefit to take the time to refer a friend, a great $125 off your next purchase.
  • Secondary Incentive for Friends - Second, you get to gift your friend $25, making it easier to refer.
  • Multiple channels - By default, TheRealReal makes it easy to invite friends to the program through three channels - email, Facebook, or Messenger. 
  • Remove Friction - Lastly, they remove as much friction as possible. They pre-write an invite and give you the option to reach out in a single click. 

The RealReal adds Exclusive Offers (Retention Strategy #3) + Premium Memberships (Retention Strategy #4)

We already saw how The RealReal utilizes customer advocacy to boost retention.

They also take advantage of exclusive offers.

Like Holar TheRealReal uses deals to encourage customers to return. However, instead of providing a straight discount on their products, they focus on providing additional value through credit.

This makes the retention strategy even more successful. The customer only gets the $100 bonus on their next visit.

Additionally, TheRealReal leverages memberships to increase the benefits of becoming a loyal customer.

However TheRealReal's membership model differs from Thrive's in a number of ways.

First, it is primarily centered on getting "first look" access to new, one of a kind products. Next, it offers multiple tiers to its membership program.

Key Takeaways

Don't constrain yourself with a single retention strategy. Each strategy can be modified to fit your specific positioning.

For example, if your brand is positioned as the premium option (like TheRealReal) in the space, focus on creating value through exclusive events, products, and customer service/experiences.

2. Instacart's reactivation retention campaign example

Instacart provides a great example of how to conduct a reactivation campaign. Below, we break down one of Instacart's many reactivation email campaigns.  

The first email

Their first email in the campaign urges the customer to download the app and gives a nice little bonus of free delivery. They also use urgency by putting a clear expiration date on their offer.

The second email

When a customer doesn’t bite, Instacart is quick to send follow-up emails. Each day an email is sent. The additional emails do a great job reinforcing the scarcity and developing the value proposition of why they should buy again.

In this example, they identify three ways Instacart benefits you in addition to the free shipping bribe.

The sixth email

At this point, most eCommerce reactivation campaigns are run through. However, Instacart shows how you don’t need to take no as a finality.

First, they empathize with their customer. The copy removes guilt from the transaction. It makes it ok that their first offer wasn’t taken, and gives permission to take advantage of the offer after the expiration date.

The ninth email

Retention Strategy through Reactivation Campaign

As customers continue to decline, Instacart begins builds more reasons for their customers to re-engage.

At the 9th email they introduce a monetary incentive to entice customers to come back. Notice that they use an exact $ amount, per the best practice.

3. How Holla uses Daily Deals to drive repeat purchases

Hollar is a fast growing online dollar store and do an excellent job leveraging daily deals to drive repeat purchases.

A few tactics that Hollar uses to make their deals more effective are:

  • Consistency - Hollar has committed to integrating deals as part of their retention strategy. It is a perfect fit for their value proposition of low priced, high quality products. Because they promote deals daily, their customer base expects it and looks for opportunities to take advantage.
  • Branding - Each daily deal is branded as a “Wow!” deal, adding to the expectancy of each deal.
  • Urgency - Again, we see urgency used. Hollar forces customers to act now if they want to take advantage of the deals. Each offer expires today.

4. How Thrive Market uses Subscriptions to drive Customer Retention

Thrive’s whole business model revolves around it’s premium membership.

Like Costco, customers sign up for one yearly membership. This membership the primary revenue driver for Thrive, as they sell their products for near cost to their customers.

Thrive Market does an excellent job reducing friction through the signup process. First, they allow you to see exactly how much money you would save by becoming a member. Then, they give you a month free.

This membership design encourages retention in two significant ways. First, because customers pay upfront, customers want to shop more at Thrive to maximize their benefits. Second, Thrive Market’s business model allows them to monetize their customer base in a different way, giving them a competitive price advantage over other online grocers.

5. How Chase Combines Triggered Emails and Loyalty Programs to Drive Repeat Purchases

The credit card industry depends on repeat use. Because of this, most brands offer some type of loyalty award program. 

Chase is no different, offering points which you can redeem for a variety of rewards. What is interesting is how they combine their loyalty program with triggered emails. 

If a customer is using their card or is coming up towards their renewal date, Chase will further cement their position by triggering an advocacy based campaign. They offer a huge point bonus for the effort, brining customers further along their loyalty program and able to actualize the benefits of the card. 

6. Starbucks' multi-faceted retention strategy

Starbucks is a master at using their omnichannel retailing strategy to drive repeat purchases.

Seeing how they leverage their app, email, and text to increase their customer's lifetime value is incredible.

Below are just a few examples.

Advocacy based retention strategy example

Here, they use a form of advocacy based retention marketing, taking advantage of Valentine's day and positioning themselves as the perfect gift.

Deal and Giveaway based retention strategy example

Here, Starbuck's uses their loyalty program to facilitate a give away. This is  a great way to deepen their customer relationships,  drive repeat purchases, and create loyalty in their customer base.

How to Enable Your Retention Marketing Strategy

The key to any customer loyalty building retention strategy is unified data.

Unified data through cohort analysis gives you the ability to create personalized responses for first time buyers, most frequent purchasers, and high spenders.

Barilliance Retention was built to give you this functionality. You can define as many segments as you want, based on any number of gathered data from time since last purchase, order volume, product pages viewed, previous email engagement, physical location, etc. etc.

Once a segment is defined, you are able to create personalized emails, including embedding 1:1 recommendations based on that person's viewing and purchase history.

Create Retention Marketing Campaigns: See how Barilliance enables Retention Marketing here.

Next Steps

The first step is to commit to retention. This means tracking your retention rate, selecting a core customer segment to target, and creating retention marketing strategies to improve.

We put together two detailed articles on two excellent customer segmentation techniques to power your retention strategies.

  • RFM Analysis - This powerful technique come from direct marketing and segments your prospects according to the three biggest factors in purchase intent: recency, frequency, and monetization. Read here.
  • Psychographic Segmentation - The truth is, we make purchase decisions on emotion. Using psychographic segmentation empowers you to give relevant offers beyond demographic information. Read here.
  • Behavioral Segmentation - Finally, we put together an in-depth overview of how you can create your own behavioral segments. Read here

To learn how Barilliance helps eCommerce brands identify priority customer segments and create targets reactivation campaigns, read about our retention marketing product or request a demo here.

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