The Best Strategies to Getting a Good Returning Customer Rate on Shopify

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Understanding what a returning customer rate is and getting a good one is vital for businesses. Many businesses, both online and brick and mortar, rely on a good returning customer rate for long-term profitability.

In this article, you’ll learn everything from what a returning customer rate is, when it’s essential to focus on, what a good rate is for Amazon, and some helpful steps to improve it.

All You Need to Know About the Returning Customer Rate

A returning customer rate is a calculation to determine what percentage of customers a business is retaining versus what percentage they’re losing in a given period. Determining a good period to measure from will vary depending on what the business deals with.

For instance, a company selling large household appliances like refrigerators will need a more extended period than a business selling clothes, since people don’t buy a new refrigerator as often.

Why Is the Returning Customer Rate Important?

It’s often said that selling to a returning customer is easier than selling to a new one. Understanding why your customers come back will help you optimize further growth methods as you learn why customers decide to stay with you. These methods will allow you to offer and gain value from your pre-existing customers. Some of the strategies listed below are effective for every business, so you should definitely utilize them.

Studies have shown that retaining an existing customer is faster and far cheaper than acquiring a new one. Selling to customers you already have a prior relationship with is also easier and more effective than converting new leads into customers. But when to focus on returning customer rate can be just as important.

For example, a business that started a few days ago should be more focused on customer acquisition than a business that’s been running for a while.

When to Prioritize the Customer Return Rate?

We begin with businesses that are brand new. They have little to no sales and should channel all of their energy into gaining new customers. The next stage is when a business begins gaining traction. You’re gaining customers and some sales, so some focus on customer return rate is warranted. In the gaining traction phase, the majority of effort should still be placed on getting new customers.

The next stage involves consistent sales. This is where your focus should be split between acquiring new customers and retaining the existing ones. After that comes your established stage. Once you get to this stage, then the customer return rate should be a clear priority. Investing in your pre-existing customer base at that stage becomes necessary for your business to grow.

What Is a Good Returning Customer Rate on Amazon?

When it comes to getting an excellent returning customer rate, there are few better than Amazon. They boast a staggering 90%+ return rate and have fostered incredibly strong brand loyalty. For instance, Amazon Prime memberships have a 92% return rate for customers in their first year and 97% after two years. It’s also estimated that each year prime members spend over twice as much as the average casual customer.

How Does Amazon Create This Loyalty?

You start by tailoring your front page for excellent new user experience. As soon as they hit the site, you start by wowing them and pushing towards that initial sale.

One way of doing this is by curating the content based on demographics. An easy example of this would be a clothing company emphasizing their summer wear for new users from warmer climates.

Alternatively, you can customize the return customer experience with the information they’ve provided about themselves. With Amazon’s unique approach, customer expectations for a personalized experience have never been higher. These experiences serve as the backbone of their method of building customer loyalty. No less than 79% of customers claim they will only participate with an offer if it’s personalized to mirror past experiences that the customer has had with the business.

Instilling a Sense of Urgency or Fear of Missing Out

Creating a sense of urgency or a fear of missing out is another method that Amazon utilizes to increase customer returns. One example is Prime day sales, which capitalize on this by restricting access to Prime members only. These sales also contain flash offers and limited stock to generate a feeling of urgency. Some of the recommendations are even tailor-made to customers based on their previous purchases or browsing history.

The chance of a first-time visitor making a purchase is generally quite low. When asked, most customers claim that their first visit to a business site is not to make a purchase but instead to learn more about the business.

Acquiring new and returning consumers requires you to engage in regular communication to keep your business relevant to customers after leaving your website. One way Amazon achieves this is by using customized emails to entice users to go back to their website and make another purchase.

The best way to keep in touch with users is by offering incentives in exchange for their email addresses. This communication line is ideal for offering new products, announcing sales, discounts, or updated information about products your store.

How to Get a Good Returning Customer Rate on Shopify

You’ve learned about what a returning customer rate is, why it’s crucial for a business, and why Amazon is so successful at retaining customers with some of its strategies. Now it’s time to look at how you can improve your returning customer rate on Shopify with the tools outlined below.

  • Offer Discounts to Returning Customers

This first strategy is one you need to be careful with. If the margins are tight, you need to be wary about how often you offer discounts. It requires a delicate balance to avoid a race to the bottom. There are two types of customers you should consider targeting for a discount.

The first is a customer who hasn’t made a purchase with you for some time. Offering a deal can be a great way to nudge them to come back to you and make another purchase. The second type is a new customer who has just completed the first purchase. This is a great way to end their first purchase on a positive note and keep the momentum going by encouraging them to return with an enticing discount offer.

  • Use Customer Accounts

There are advantages and disadvantages to using customer accounts that every business needs to be aware of. One key benefit is that an account can make future purchases easier since you already have all of the shipping information. An account will also give your customers access to all of their past orders. However, the disadvantage is that creating an account can be too big a commitment for new customers.

  • Send Appealing Emails to Customers

Email marketing should be at the core of any good customer return rate strategy. According to a Venture Beat Insight report, email marketing has the highest return on investment. The report also states that 84% of marketers believe email is essential for customer loyalty. Emails give you the ability to maintain and grow relationships with your pre-existing customers. However, it’s important to note that these messages should always focus on providing value to customers.

  • Improve Your Customer Service

A transparent support system is essential in effectively communicating with your customers and helping them with their needs. A good support system will offer communication to a customer before and after they make a purchase. Using a live chat service or a help desk tool can help turn questions into sales and a negative complaint into a peaceful resolution.

It’s also important to note that questions or complaints could come from many angles – via social media, emails, or on the website, so it’s vital to have your bases covered. The other significant benefit is customer feedback. Hearing directly from customers can help you learn about improving your products as well as overall customer experience.

  • Create a Customer Loyalty Program

As mentioned earlier, one of Amazon’s key strengths is its loyalty program. Giving customers a loyalty program is an incredibly effective tool because it encourages more frequent purchases from customers. The more they purchase, the better the loyalty rewards are for them. Start by offering new customers a welcome bonus for signing up and then additional rewards after a certain number of purchases. That way, the customer is getting rewarded continuously, and you are getting repeat business.

Returning Customers Are Vital for Growth

The customer return rate is a critical figure that any established or growing business needs to keep as high as possible for future profits. Utilizing the strategies that you’ve learned in this article will help you gain more sales and improve your brand. With those steps, you’ll be able to increase customer loyalty and take your business to the next level.

Current customers understand your product and brand. They know you and have done business with you before. Focusing your efforts on improving the experience for them is the best return on investment you’ll ever make.