Importance of retention

Retention definition

Simply put, when it comes to looking at customer retention within ecommerce, it is the percentage of your customers that repeat purchase from your ecommerce store.

For example, if you have a total of 20,000 customers in a year and 10,000 of them make more than one purchase from you within the next year, your customer retention rate would be 50%. The higher the customer retention rate, the better it is for your business.

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The importance of customer retention

The more customers that are retained, the less stress your new customer acquisition engine is faced with. This means that your business will be under less pressure to spend more money on acquiring net new customers. With the cost of advertising continuing to rise (it's up over 200% in the past 8 years), focusing on customer retention will be a big win for your business.

Similarly, having a higher customer retention rate will lead to your business being more profitable because you will be driving revenue without needing to go out and acquire net new customers.

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Retention statistics that matter

Brands are losing $29 for each new customer that they require thanks to a 222% increase in customer acquisition costs over the past eight years.
A 5% increase in customer retention can increase a company’s profitability by 75%.
The probability of selling to an existing customer is 60-70% while the probability of selling to a new prospect is 5-20%.
Loyal customers spend on average 33% more per order compared to others.
65% of a company’s business comes from existing (or retained) customers.
It costs 16x more to build a long-term relationship with a new customer compared to keeping an existing one.
Acquiring a new customer costs at least 5X as much as retaining an existing one.
86% of customers with a great purchase experience will likely buy from the same company again.
You can increase the value of your company by 30% with only a 10% increase in customer retention levels.

Ecommerce Retention FAQ’s

Do certain products categories tend to have higher retention rates than others?

Generally, products that require replenishment, such as food/beverage and health/beauty products have a higher repeat order rate than others. These are products that consumers regularly and predictably consume meaning that they are likely to have a higher chance of needing to be reordered.

What is a good ecommerce retention rate?

Based on a study from Omniconvert, a benchmark ecommerce retention rate is 31%.

What is the best way to ask a current customer to buy from my business?

Leverage tools like Upscribe to make it easy for existing customers to reorder from you in as little as a single click or send them email nudges to remind them to purchase from you again.

Retention is the key to unlocking sustained ecommerce growth

Understand what retention is and why it's so important to focus on to help drive lasting ecommerce success

Retention definition

The importance of customer retention

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