Customer retention is hard for most ecommerce stores, for two reasons:
Running a Shopify brand is naturally a high churn business.
The average repeat purchase rate for ecommerce brands is 28%. That means if more than 28 customers out of a 100 ever come back for a second purchase, you’re doing a good job.
This just isn’t SaaS where you have 85%+ retention rates.
The second reason is that most brands hire email agencies to run their retention strategy whose entire philosophy is to just “send more email and SMS.”
That assumes your brand’s ability to retain customers solely depends on having a great email + SMS marketing strategy.
Although that helps, it’s far from the truth.
I’ve listed seven reasons why ecommerce brands have a hard time retaining customers (along with some practical advice).
Let’s get into it:
7 reasons why ecommerce brands struggle to retain customers
1. The product isn’t retention-friendly
As unfortunate as that sounds, what you sell already determines a big chunk of your ability to retain customers.
In other words, if your product isn’t replenishable, your repeat rate will naturally suffer (but there are ways around it, which we’ll cover later in this article).
When you think about retention-friendly products, it’s almost always ones that fit into a daily routine.
Take a look at my man Jerome here:
He has a pretty extensive morning routine. He probably goes through a dozen beauty products during his ritual.
If you can create a replenishable product that fits into your target audience’s daily routine, you’re automatically giving them a reason to come back.
2. Not attracting high quality leads
Great marketers know that the first purchase is just the beginning of the relationship. The quality of your leads matters a lot.
If the customers you currently attract are mostly promo hunters, meaning they never shop at full price, you’re going to have a hard time building a profitable business. It’s also one of the reasons why I think Black Friday is overrated, but that’s a topic for another article.
You need to find an acquisition offer (e.g. bundle, free gift, etc.) that attracts high AOV, high CLV customers. That takes testing, but it’s something you need to figure out.
Another thing you can do here is collect zero-party data using Alia. What that means is attaching a quiz to your email sign up form where you ask users about their shopping intent or problem.
You can then segment your audience in Klaviyo based on the burning problem they have and deliver more relevant marketing messages (more on segmentation in the next newsletter).
3. The product is disappointing / not delivering on promises
Is your product actually any good? Are customers constantly raving about your product(s) and leaving 5-star reviews?
And be honest… because if you answered “no” to these questions, then “send more email and SMS” isn’t going to be the answer for you, and you have bigger things to worry about.
Another major retention factor is being able to deliver on marketing promises. If your Meta ads hype someone up to buy promising one thing, but what they get is completely different, they simply won’t come back.
Here’s an example:
Dropshippers tend to market really aggressively (sometimes with false claims and promises) just to get you to make that first purchase. Not a great idea if your goal is to have high repeat rates.
4. Nothing else to sell
If your main product is a one-off purchase and you have nothing else to sell that the customer wants, your retention rate (and your business) will inevitably suffer.
Launching products is much easier when you’re in supplements, fashion, or beauty. There’s a clear product flywheel where you can consistently bring customers back with new variations (e.g. new colors, flavors, or materials).
But for one-off products, you need to get creative with your product strategy. An example that comes to mind here is autobrush, which sells an U-shaped toothbrush but also offers a complimentary toothpaste.
Here are some other product extension examples:
Death Wish Coffee launched limited-edition mugs for Halloween.
Neutonic began with productivity drinks, and recently expanded to creatine sachets.
LMNT sells ten different flavors of electrolytes.
5. Too expensive
The more expensive your product is, the fewer people can afford to buy from you again. There just aren’t as many people who can justify a $1500 purchase versus a $150 one.
If you’re in the luxury space, your best strategy is to identify high first-time AOV buyers — those most likely to become VIPs — and cross-sell complementary products or services. You can use software like RetentionX or Lifetimely to do this.
For example, Eight Sleep sells a $3,000 sleep pod, but also offers a premium subscription for advanced wellbeing data, giving customers a reason to come back without buying another pod.
6. Bad shopping experience
It takes one bad experience for the customer to never buy from you again.
If your product takes five days to ship and arrives damaged, good luck getting that customer to order again.
Some other things to consider here are:
- Is the packaging nice?
- Is your customer support responsive and helpful?
- When customers reach out, are they talking to a real human or just a chatbot?
You need to nail the shopping experience, especially the first 30 days post-purchase.
7. Not marketing hard enough post-purchase
Let me ask you a question:
Which brands have you bought from the past 3 months?
How many can you name?
One? Two? Maybe five?
The point is this…
To be memorable, you either have to be amazing or really sh*t.
99% of brands just aren’t marketing nearly enough after the first purchase. Think about it this way:
If 50% of your second purchases are placed within 21 days, then after those initial 3 weeks, your ability to convert a customer to a second purchase goes down drastically.
Most brands need to be a lot more aggressive with their post-purchase marketing. If you’re currently sending 5 emails and 2 SMS, send 10 emails and 4 SMS. You can try and throw in direct mail as well.
These don’t have to be complicated marketing emails.
Send a personal order confirmation email from the founder. Make them feel great about their purchase. Show some before and after images. Give product usage tips. Send a valuable eBook. Take your top performing campaigns and add them to your post-purchase flow. Offer them more of what they bought. Introduce some other products you have.
You see where I’m going with this?
Your marketing inputs will control your outputs.
