The main reason why customers churn is because they no longer see your site as relevant. That’s the marketing jargon at any rate. In simpler terms, your customers stop shopping with you because they have a better experience elsewhere.
While eCommerce remains an aggressively competitive space, customers don’t stop shopping with you for no reason. It could be pricing, as historically that’s been the main driver. But as eCommerce and retail are experiencing rising cost prices, most businesses are in the same storm, if not in the same boat.
So while pricing and things like free shipping could be a concern, it won’t necessarily be the first thing on customers’ minds.
Increasingly other considerations are driving buyer decisions in the eCommerce space. Customers are expecting considerably more from their chosen sites beyond the usual discounts and free shipping.
Therefore, before you can reduce customer churn you need to identify why they’re churning in the first place.
Why Customers Churn
Customers churn for all sorts of reasons and thanks to lack of detail in the data, you’ll never fully know why.
However, by digging into the data you have available you can make some educated guesses. This can be a humbling experience but it’s essential to reducing customer churn.
You need to look at every aspect of your business from pricing to return rates.
You want product returns to be as close to zero as possible, although this is rarely the case. The industry average for eCommerce is 20%.
However, there are two things to consider when analysing returns. The first is the number, the second is the reason.
If the majority of products are being returned because they were damaged in transit or because they were poorly quality, you have gained two key pieces of information.
Moreover, you have two actions you can take. Change courier service and potentially change suppliers.
You also need to look at your website analytics to identify any negative trends.
Conversions are an obvious place to start. You need to look at recent data as well as comparing the month and year to date against the same periods of the previous year.
This will help you to spot any drops in performance. It’s reasonable to have dips at certain times of the year depending on what you sell and seasonal trends.
But if you’re consistently trending down on conversions, then you have a problem.
Similarly you should have data on new versus repeat business.
You also need to look at the number of users hitting your site, bounce and exit rates and dwell time.
This will give you a clear picture of where your customers are entering and leaving your site.
If they’re exiting at the checkout stage it could be that your checkout process is too complicated. Or maybe even broken. Or your shipping fees are too high or you’ve added hidden charges like a handling fee.
Take some time to really understand what the data is telling you. Even a higher than normal bounce rate on your delivery and returns page could suggest customer dissatisfaction.
Ways to Reduce Customer Churn
Assuming you’ve taken the time to take an unvarnished view of your businesses, you’re in a better position to make changes.
Without a warts and all approach to this process you won’t be able to reduce customer churn. Not in any meaningful way at any rate.
Assuming you’ve analysed your performance and identified and fixed the basics, here are some effective ways to reduce customer churn.
Personalise the Customer Experience
Your customers want to feel like you know who they are. As opposed to a faceless customer ID and an order to fulfil.
This means personalised emails or messages, offers tailored to their purchase history or personal preferences and exclusive offers.
The good news for you is that personalising communications yields results. So while it may take some work putting the systems and processes in place to engage with your customers, you’ll see a sustained up lift in both sales and average spend.
To be clear, this is increasingly what eCommerce customers expect from the websites they shop with. At minimum. The days of the generic email are over.
Unifying your data in a single place makes personalising your communications much easier. A Single Customer View means you can tailor messaging to match each customer’s profile across all your channels.
This gives your customers a consistently rewarding experience no matter how they choose to contact you.
Or, more to the point, when you contact them.
Taking advantage of the data you have at your disposal means you can send personalised emails to every customer.
Rather than a generic email with product recommendations based on nothing at all, they’ll receive recommendations tailored to them.
Your customer’s purchase history, favourite brands, clothing sizes and more is all at your fingertips. Use it to blow your customers away with a personalised experience.
You can take this further than just communications. Leveraging the data in your customer data platform, you can create personalised web pages.
Integrating your CDP with your website means you can create an online experience based on the products your customer has bought and/or viewed.
This level of customer experience drives a significant up life in sales and could significantly reduce your customer churn issue.
There are two prongs to this approach. The first is to attract lapsed customers back to your site. The other is to contact customers who abandon their baskets.
Re-engaging with Lapsed Customers
If you’re improving the customer experience then it’s only reasonable to entice lapsed customers back.
After all, they stopped coming to your site for a reason, so re-engaging with them can reverse, if not reduce customer churn.
Assuming you’ve pooled your data, you’re in a position to send your lapsed customers personalised promotions and offers to re-engage them.
The data you have on your customers may be a little out of date. But, presenting them with something that’s likely to be relevant is better than presenting them with something generic.
In terms of any offers or discounts, it’s up to you how personalised you want to make them. Too specific and you could risk alienating the audience because you’re been presumptive.
An aggressive discount code that can be used across the whole site, will likely get a better response than a discount on specific products.
Customers abandon baskets for lots of reasons. In many cases they’re not ready to buy at that moment in time. It could be they’re waiting for payday or just ran out of time on their lunch break.
However, it’s just as likely the customer abandon their basket because they:
- Found the product cheaper elsewhere
- Think you charge too much for shipping or
In this instance you need to act swiftly and decisively to win back that customer and that sale.
Providing you’re able to utilise multiple channels, you can send an SMS, email or app push notification. Offer a discount or free next day delivery to win the customer back. While this may cut into your margins, a little of something is better than all of nothing.
If they are a repeat customer you will also have the ability to personalise the message and even offer tailored promotions.
Either way, being able to react quickly using marketing automation will help you win back customers.
If the customer doesn’t immediately convert there’s a chance you’ve lost the sale. However, it’s as likely that they weren’t ready to buy.
Have an automated follow up email campaign ready to go. If a customer doesn’t convert after 24 hours they get an email reiterating the offer. Putting a time limit on the offer helps to create a sense of urgency and nudges customers closer to converting.
A second email can be sent six hours and one hour before the promotion expires.
Giving the customer those nudges to remind them of the promotion is beneficial for two reasons. Firstly, it helps you to get a sale that would otherwise be lost. The second is the customer will appreciate you’re making the effort. Especially if your emails are personalised and include helpful content or other relevant product recommendations.
Essentially, the more value you provide the more your customers will respond.
This may seem painfully obvious but one of the most effective ways of reducing customer churn is having a loyal customer base.
Building loyalty takes time but it starts with repeat business. If you’ve done the hard work of consolidating your data, learning about your customers, improving your offering and customer service, you’re on the way.
Creating a loyalty programme that genuinely rewards customers for shopping with you is a sure fire way to reduce customer churn.
Primarily because it incentives them to spend money. The more they spend the greater the rewards.
However, it’s important not to make this your focus. Customers aren’t stupid and yours won’t be the only loyalty programme they’ve signed up to.
Offer little more points for money spent and they will quickly lose interest.
Take advantage of your data and create personalised offers based on customer profiles. Bespoke offers will delight your customers and drive sales and increase average order value.
Repeat customers spend 67% more than first time buyers. It gets even higher once they cross the threshold and become a loyal customer.
This can’t be understated. So any money you invest in setting up a loyalty programme, or that you lose on discounts, you will more than recoup.
Investing in your customers in a way that they feel valued will always yield long term high value returns.
Stand out from the Crowd
Putting the effort into reducing customer churn by improving your offering will help retain customers. Improving retention by as little as 5% can increase revenue by a minimum of 25%. Some businesses have reported returns well in excess of 100%.
But those success stories come from a place of desire to do more for the customer. To add value in any way they can and by investing in the tools to do so.
The good news is that you’re on the right track. Firstly you’ve recognised there’s a problem, and secondly you want to do something about it.
You also have a wealth of data already held within your business that you can make use of.
All that’s required is the right tools, and a mirror so you can take a good hard look. Because without honestly reflecting on why your customer churn rate is high, nothing will improve in the long run.
Even a loyalty programme will fizzle out because you won’t have the repeat customers to turn loyal.
To learn more about how you can consolidate and use your data to better understand you customers, why not book a demo of the Xtremepush platform today?
Xtremepush is the world’s leading customer data and engagement data platform. We work with various top brands within the eCommerce industry. Schedule a personalised demo of our platform to learn more about how we can help your brand drive repeat customers and increase revenue.