How Customer Retention can Grow Online Store

Updated on 14 September 2022

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online retention

Are you wondering why your online store is just not growing as quickly as you thought it would? Maybe you had it all planned out. Maybe you even had a business plan? You know, numbers and stuff that made sense. And the theory checked out. 

But now you’ve put it to practice, and things are just not going the way you thought it would? You have sales, but every month is a struggle to break even.  Even when you make profit, it’s minuscule.  

You see, most eCommerce store’s revenue and profit charts look like the graph below. 

It’s getting harder and harder to break through revenue plateaus. Every month is a fight! Worst of all is profit is declining regardless of your efforts. Sound familiar? 

If it does, it’s okay. You are not the only one. But that’s why I’m writing this article. It’s my job to help you gain clarity on why your business might be stuck in the mud. Are you ready for it? Here we go! 

The Reason You Aren’t Seeing Massive Growth Might Be Because Your Repeat Customer Rate Sucks! 

Let me explain. Did you know that most eCommerce stores don’t make much profit on their first sale? And that’s okay. That’s actually normal in case you were wondering! 

That is why growing an eCommerce business is so difficult. Rising advertising costs on Google and Facebook is already making it difficult to find your first customer. 

However, getting people to come back and buy again… Well, that’s tougher than trying to find an open table at a nice restaurant on valentine’s day. 

It’s possible, but you are going to have to make a few calls. However, don’t take my word for it. Just have a look at the graph below. 

What you are looking at is the percentage of customers that are open to shopping from you a second or third time. If you are an online retailer, or eCommerce brand, then you have a 16%-22% chance of getting the second sale. 

That means that out of every 10 customers, only 1-2 would be open to buying from you again. That doesn’t mean they will buy from you again; it just means they are open to it. 

It’s not only your job to ensure they have reason to buy from you again, but it’s also your job to notify them about the reason as well through SMS or email for example! 

Why Are Repeat Customers So Important To Your Bottom-Line? 

Digital advertising costs are rising all around us. That means that the cost of acquiring a customer using digital marketing for example is also increasing.I’m sure you’ve seen this already in some way shape or form. This forces us to pay more to acquire a customer, and chows away your profit margin. 

This means you make less profit every time you get a new customer. That sucks unfortunately, but it is what it is! 

The question is, what can we do to combat this? And this is where repeat purchases come in. You see you might be making less profit on the first sale. However, because you’ve already acquired the customer, you don’t have to spend the same amount to get them to buy again. So, when they do buy again, you have a good chance of making more profit! 

Example Of Repeat Customer Rate Of A Struggling Store 

The store above basically starts from scratch every month! It’s chasing new customers like rapid dogs after a rabbit! If by any chance they did not succeed in finding new customers, their business model crumbles! That’s a very high-risk business model! 

Example Of Repeat Customer Rate Of A Highly Profitable Store

The store above however has 67% of their customers coming back monthly! If they had to struggle to find new customers during the month, they would still be okay. 

That is because most of their expenses will most likely be covered thanks to customers coming back without much effort on their side. 

Sending email and SMSs aren’t cheap, I know. But considering that your email and SMS list consist of people who have bought from you before, you have a higher chance of selling them something again. 

These people know you now. They hopefully trust you too. Therefore, by sending an email and SMS, you stand a good chance generate money back. This is if you have good reason for them to come back!  

Like I said before, my job is to help make you aware of what might be causing you to plateau. Most stores are always chasing new customers. Because the cost of advertising is increasing, and profit is shrinking on the first sale. That is why every eCommerce business owner needs to ask the question… “How Can We Bring Customers Back and Get Them to Spend More?”  

It’s not that easy. But it is that simple! Should I show you a graph to ensure I get my point across? Here we go! 

Here you can see what happens to your profit when an existing customer returns to buy from your store a second, third, and even fourth time. Your initial customer acquisition cost will always be the highest. But once you’ve acquired the customer one way or the other. It’s gets cheaper to bring them back! Because it’s cheaper, the profit you make on the sale is more! 

This will allow you to start improving your overall profit margins as a business. 

So, if you do feel stuck in the mud. If your revenue and profit is not where you want it to be… Dive deep into you repeat customer stats! 

If your repeat customer purchase rate is not between 20-30% then you have a lot of work to do! Wondering what you can do exactly to bring them back? 

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