Why Customer Retention Is Key For eCommerce Marketers


Efe Yuceman, Consultant at emarsys, discusses one of the key challenges facing eCommerce businesses, or any business which is concerned with driving traffic towards a website for conversion.

This clip is from our webinar, "Win Back Revenue: Recover Revenue with Successful Abandoned Basket Campaigns", in association with emarsys. You can watch the full on-demand recording of the webinar here.

So I'll start off by talking a little bit about the challenge faced by most eCommerce businesses, and really any businesses that are driving traffic to a website for conversion. So, the strategy for most of these business is focused on how can we generate more traffic with either organic search or via paid advertising to get potential customers to visit the website. Given that 92% of visitors to a website never convert and, of those that do convert, only 70% will repurchase, we believe that the acquisition focused strategy is flawed, and the missing link in the strategy is thinking about customer retention. So, as I mentioned, you spend a lot for the right keywords and the right banners to get people to visit your website, if you move through that funnel, some of the customers will reach a cart, but a lot of those people will abandon that cart as well - I think the benchmark is currently 60% - and then finally, hopefully, we get to customers who have actually made a purchase with us, and we can actually nurture to retain them. Now, we know that most of the customers don't stick around, so we know that retention rates for most eCommerce and retail businesses are quite low. But we should look at it in terms of what is the likelihood of converting an existing customer, or a customer that has started a buying journey, what is the likelihood of that compared to actually acquiring a brand new customer?

The statistics tell us that 63% of abandoned online purchases are potentially recoverable, so there is definitely an opportunity there to use our existing connection to grow revenue, and they also tell us that it is 70% more expensive to sell to a new customer than it is to focus on our existing customers. And, we would argue that, even a customer that bought from you an unusually long time ago, will convert much better than a brand new customer. So, we at emarsys, in terms of how we talk to businesses about their digital marketing strategy, we believe that from an acquisition focused strategy, we should be thinking more about retention.

Along with the reasons that I've mentioned in terms of the relative cost, also the upside of focusing on retention is very substantial as well. According to Adobe, a 1% increase in your retention rates can lead to a 10% growth in revenue, so that's a really substantial upside for us to focus on, so that's where we try to lead our clients in terms of what they should be doing with their resources and time.