How to improve the Customer Retention of your Shopify store

How to improve the Customer Retention of your Shopify store

Is there a tool that can ensure my brand a long-term success? And how can I implement it in my marketing strategies quickly and easily? If you have ever wondered about this, you are reading the right article. The perfect solution is to develop a customer rentention strategy!

What is Customer Retention? 

Customer retention is a business strategy that a company implements in order to retain customers and prevent them from being attracted by the competition. Specifically,¬†the C.R.R.¬†(Customer retention rate)¬†is an indicator used for the analysis of customer loyalty¬†and expresses the percentage of consumers that continues to buy from the same brand in a specific period of time. Now that I’ve explained what it is, let’s talk about how it can benefit your e-commerce! Among the many advantages there is one that stands out for importance: the customer retention represents¬†a marketing activity that allows you to improve your customer experience, increase the profitability of your company and lead you to a real long-term success. How? Well, this strategy is focused on retaining¬†acquired customers, a choice that turns out to be advantageous for these reasons:

The retention costs of repeat customers are lower than those of acquiring the new ones

actually, the growing costs of advertising have strongly impacted on the possibility of acquiring new customers, making it more advantageous to work on existing ones. The research carried out by Frederick Reichheld, of Brain & Company, shows that increasing customer retention rates by 5% increases profits by 25% to 95%! This concept is well explained in this graph, which shows how the company’s gain ranges during the customer acquisition phase, retention phase and in a possible phase of consumers loss.¬† If you want to know more: The Value of Keeping the Right Customers (

Investing in repeat customers and knowing how to keep their means decreasing the possibility of losing them

avoiding the risk of unpleasant and potentially harmful negative publicity and allowing your business to grow. Here is an example: if in a month I get 10 new customers but I lose the same number of consumers, the growth of the company will be at zero. Therefore, I will certainly have to try to attract new customers, whitout neglecting the ones I already have and it is precisely to these that I will have to reserve particular attention and offers. 

Influence the customer lifetime value (CLV)

The CLV is the value that the customer has for the company during the period in which he buys, affecting the company’s revenues.

In order to achieve this goal, companies use promotion and marketing tools mainly through digital channels, such as mobile apps, which allow them to constantly interact with customers and offer customized proposals. Specifically, Shopify is a service that aims to help your company from all these points of view with a very low cost in terms of money and time.

To sum it up and make me clearer, I’ll give you an example:

The two lines represent two shops, each shop has 100 customers that buy a product that cost 10 Euros every month. The light purple store retains 5% of those customers each month and the dark purple retains 10%. As you can see, an extra 5% can lead to rapid growth, which would be difficult to match with direct acquisition.

How is the customer retention rate calculated?

Let’s move on to the most critical part of the question. How is the customer retention calculated? To measure it we use¬†the customer retention rate, here is the formula:

If you are a little confused, don’t worry, I’ll try to explain it in a¬†easier¬†way. To calculate the customer retention rate you have to:

  • Define a period of time to be taken as a reference (6 months, 1 year and so on)
  • Calculate the number of customers at the end of that period (obviously any lost users must be subtracted)
  • Subtract new customers acquired during the same period
  • Divide by the number of customers counted at the beginning of the period
  • Multiply x 100 to get the percentage

The higher the percentage is, the healthier a business is  (in terms of loyalty). To be effective, this data must be monitored during the life cycle of a business (perhaps on an annual or quarterly basis).

This graph shows that actually most customers leave the company mainly because they percive their brand’s indifference towards them.

Why is it important to create stronger and lasting relationships with your customers to increase retention?

The relationship that the company has with its customers says a lot about its future: it is important to remember that each customer has an economic value that depends from the expenses he makes during the entire time in which he relates to the brand. This value is expressed by the customer lifetime value (CLV). Especially in the e-commerce reality it is necessary to maximize the potential of CLV; actually, not only the phase in which the customer purchases our service/product is important, but also the post-purchase phase in which the consumer must be followed, supported, courted through specific and attractive proposals in order to build loyalty. There are two main psychological theories that can affect the trust attribution process:

  • Motivation and Expectation Theory: An individual behaves and acts in a specific way if he is motivated by a desirable outcome. If you want your customers to make an effort, such as subscribing to your site, you must show them that they will be rewarded, maybe through loyalty programs (cards, points…).
  • Instant gratification: If people want something, you have to give them what they want immediately. This concerns services, website, fast and flawless shipping: for example, offering a fast shipping will allow the customer to have his product as soon as possible, getting a rapid gratification for the purchase.

You will certainly know Apple, a brand that has effectively retained its customers: thanks to some well-studied strategies it has managed to establish itself in the common imagination as a fashionable brand, also going to outline a different social perception between those who buy Apple and those who don’t. It has made the minimalist style of its products and stores trendy and offers a fast and safe support service. In this way, the loyalty of its customers has been guaranteed and now they will hardly risk to try other brands when they have to change their smartphone, pc or tablet. This is the key to success that any company should follow: to communicate trust, to represent a constant guarantee and also to reserve small “surprises” for the customer (such as specific offers, discounts…) in order to always make him satisfied by the service you offer.

What strategies can be implemented to improve CRR?

As we have already seen the key to success is in the customers and it is important to build an experience that fits them perfectly. There are many solutions to do it, here there are four main strategies to increase the customer retention of your e-commerce!

Develop your App

Users want a fast, intuitive and at-their-fingertips tool so they can shop wherever they are! The App can be a great solution, because of its ability to keep a constant brand-customer communication thanks to push notifications, speed up the purchase process with search and filters and increase conversion rates.

Design a personal email marketing

Emails are fundamental in order to retain customers because they accompany people before and after the purchase increasing the clients engagement with your brand. Through the personalization of emails with offers based on the analysis of the products they have purchased in the past, discounts for birthdays or advices on how to use the product you will reward the trust they have placed in your brand! Also, they are easy and inexpensive to implement in your marketing strategies.

Create a loyalty program

Rewarding customers for their purchases and interactions with “points” that can be used for discounts, gifts (such as gadgets) or free shipping, will increase their loyalty and will encourage them to continue to buy from the same brand.

Offer the best customer experience

Did you know that 86% of customers would pay 25% more for better customer service? This shows the importance of improving the customer experience to ensure that the customer will come back to buy because he is satisfied not only by the product, but also by the experience itself. It can be improved by offering fast and accurate shipping and immediate and easy-to-contact customer service (maybe through the help desk service or Facebook and Instagram chat).

... And now? ūü§Ē

Now that I have described all these strategies I cannot leave you without suggesting the solution: Shopify offers the possibility to implement the customer retention through some of these services such as, for example, developing your app quickly and easily.

The best brands are already taking action to increase their customer retention through Shopify services. What are you waiting for? Start creating your app!