It is common knowledge that your company only makes a profit when the customer lifetime value exceeds the customer acquisition cost. So you may have to put in a lot of effort to raise customer awareness, advertise your products, and persuade customers to visit your store. And you’re unlikely to make a profit after your customer’s first purchase. So to reach the break-even point, you may need to keep them coming back at least 4 to 10 times.

No business can thrive unless its customers return. Return customers are the ones who generate profits.

So, how do you persuade your customer to return to your store for more?

Today’s article will discuss some practical strategies for effectively retaining existing customers.

What exactly is a returning customer?

Before we get into the specifics, let’s define a return customer.

A return customer has previously purchased your products or services and interacted with your company before returning to repurchase them (at least one more time).

When customers return several times and continue to purchase from your store, they are referred to as repeat customers.

Repeat customer becomes loyal when they consider your products or services first whenever they require something. A satisfied customer is willing to recommend your products to others. They are also unconcerned about product pricing or availability.

Every business’s mutual goal is to convert potential leads into first-time customers, keep them returning, and build customer loyalty.

Which customer retention metrics should your Shopify store prioritize?

To measure customer retention, you could track a variety of metrics. However, the following are the most important:

1. Purchase rate of recurrence

This is the percentage of customers who made multiple purchases from your Shopify store during a given time out of the total number of customers who purchased from your Shopify store.

You can calculate your repeat purchase rate using the following formula:

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

2. AOV

Your average order value is the amount of money spent by your customers on each purchase they make at your Shopify store. Your average order value may arise from your customers purchasing more expensive items or purchasing multiple products (or many of the same products) at once.

A high average order value could indicate good customer retention because loyal customers are more likely to spend a large sum of money on a single order. New customers are less likely to make large purchases the first time.

Divide your total revenue for a given period by the number of unique orders received to calculate your average order value.

Total revenue / total number of orders = Average order value

3. Frequency of purchases

The purchase frequency enables you to determine how frequently your customers make purchases from your store. Your purchasing frequency may vary depending on your industry and the products sold in your store. Stores selling fast-moving consumer goods, for example, would have a very high purchase frequency, whereas stores selling consumer durables would have a low purchase frequency.

You can use the following formula to calculate your average purchase frequency over a given period:

The total number of purchases divided by the number of unique customers equals the average purchase frequency.

4. Customer lifetime value

Your customer lifetime value is the amount of revenue you will earn from a customer throughout their relationship with you. Increasing customer retention will increase customer lifetime value. You could use numerous complex formulas to calculate your customer lifetime value, but let’s keep things simple. Here’s the most straightforward formula you could use.

Customer lifetime value = Average order value multiplied by Average purchase frequency multiplied by Average customer lifespan.

7 ways to keep customers returning to your store

Repeat customers are your company’s most valuable asset. Therefore, satisfying these customers can be a powerful strategy for increasing revenue.

The following section will go over the seven most effective ways to earn repeat business.

1. Make use of Shopify Analytics.

Shopify analytics can help you understand your sales trends, your recurring customers, and what they buy. It even shows you which items they are purchasing in bulk, which may allow you to bundle them and offer discounts on them.

It may assist you in better understanding your customers’ interests and offering products that match what they are looking for, thereby keeping them coming back for more.

Respond to customer inquiries as soon as possible

According to Forrester Research, 53 percent of customers abandon their carts if their questions are not answered immediately. And this isn’t just for new customers. Even if your customers have previously purchased from your store and returned, they are likely to abandon their cart and stop doing business with you if you do not promptly respond to their questions.

2. Improve your return policy

Making your return policy more lenient will increase your customers’ trust in you. In addition, if you have such an excellent return policy, it will make them feel like your offerings must be high-quality promotional items in exchange for a review, which is a great incentive to increase the amount of feedback you receive.

And if you’re worried that having a return policy will encourage customers to buy your products, use them once, and then return them, causing you to lose money on shipping, don’t be.

3. Respond to customer inquiries as soon as possible.

According to Forrester Research, 53 percent of customers abandon their carts if their questions are not answered immediately. And this isn’t just for new customers. Even if your customers have previously purchased from your store and returned, they are likely to abandon their cart and stop doing business with you if you do not promptly respond to their questions.

That is why you should use an intelligent chatbot in your Shopify store.

4. Customize product suggestions

You can enhance your customer experience by displaying the products your customers are most likely interested in throughout your Shopify store. Displaying product recommendations based on your customers’ preferences gives the impression that your catalog is tailored to their needs and tastes. It also improves the customer experience because they don’t have to waste time looking for the products they want.

You could even make product recommendations based on how they have previously browsed your store. Using personalized recommendations makes life easier for your customers and demonstrates that you have what they need, so they won’t need to look elsewhere and return to your store.

5. Allow customers to sign up for product subscriptions.

If you sell products that your customers need to buy regularly, you don’t want to allow them to discover your competitors the next time they need to buy.

Allow them to subscribe to those products and offer them a discount. This allows you to earn recurring revenue and eliminates the effort required for your customers to reorder and the possibility of them choosing a competitor.

6. Make a feedback loop.

After a customer makes a purchase, you want to lay the groundwork for a positive relationship by soliciting feedback and even requesting a review. Asking for feedback demonstrates to your customers that you value their opinions and makes them want to stay with you for a more extended period.

Requesting a review is highly effective because they are conditioning themselves to think positively about your store when they leave a positive review. Thinking negatively would create cognitive dissonance in their minds, and it would simply not feel right. They’ll be essentially justifying the act of leaving a positive review by telling themselves that they like your store and the products you offer.

7. Enhance your user experience

You would lose customers if your users had a negative experience. Therefore, your store should be simple to use and require as little effort as possible from your customers for them to make purchases. Analytical tools and heat maps can help you identify and resolve issues with your store.

When designing your Shopify store, avoid deviating too far from commonly accepted web conventions; doing so may cause your website to feel less intuitive. Customers may become confused and frustrated if certain buttons and other features are not located where they would expect them to be. That is something you do not want to happen.

Final thoughts

Many businesses struggle to attract new customers and keep existing ones coming back in this highly competitive market. To build a satisfied and loyal customer base, you must cultivate relationships over time.

I hope this article has given you some ideas for putting customer retention strategies into action.gproduct recommendations