We all know it’s cheaper to win business from an existing customer than a new one, various sources quote anything between 6 and 10 times more cost to win a new customer than to sell to an existing one!

With this in mind and your budget being stretched on your eCommerce website in a strive to attract new customers, how about letting your existing customers know just how much you love them and consider Retention Marketing?

What is Retention Marketing?

In short – the marketing strategy to focus on encouraging existing customers to purchase again by keeping them happy through loyalty initiatives.

This can’t replace your existing strategies which you no doubt have itemised those which generate the best returns but should be used in conjunction with these to increase average order value.

Most businesses focus more highly on new customer acquisition than retention but is this the right strategy?

Certainly if you are a new business then new customers are key to getting your business off the ground, likewise, you may be selling one-off products or services that have a low repeat order rate, new customers for you may also be a priority.

For an established business with medium-high re-order rates or the ability to cross-sell, Retention Marketing could unlock a huge revenue stream for you, for little or no additional cost!

Retaining customers will increase your profit


Existing customers are more than 30% likely to spend more compared to new customers and, away from eCommerce, we’ve all witnessed the far-improved conversations with an existing customer over when we were trying to convert them along with the other 3/4/5 businesses they were talking to. They are less price sensitive as they’ve already experienced the great value of your products.

Increasing customer retention by only 5% can increase profits by 25% (source Forbes)

But, dont think that this means you can drop your customer service standards, new and existing customers still need the high standards from all the touch points with you through the buying process: emails, phone calls etc.

Keep them happy on all sides and they’ll become your brand evangelists, promoting you, for free, to a whole raft of other new customers.

Channels most used for customer retention

We all use the channels we tend to get the most success from whilst keeping a good mix of methods of approach, but do you measure which have the best success for those all important existing customers?

Below shows some of the best results by channel to show which are most effective for customer retention:

  • Email marketing – 56%
  • Social media – 37%
  • Content marketing – 32%
  • Referral marketing – 26%
  • Search engine optimisation – 13%
  • Display advertising -12%
  • Mobile advertising – 8%
  • Video advertising – 7%
  • Affiliate marketing – 6%
  • Paid search – 4%

Do you need to look at your spend across these channels and adjust your current strategy?

Existing customers can also generate word-of-mouth marketing so think of them as an additional sales team, promoting your business!

Why Retention Marketing?

Social media marketing and PPC used to be relatively cheap but not anymore, these channels are certainly more expensive and less effective than they used to be. Many reports show the cost of non-brand keywords have increased 75% and branded keywords are up 300% in the last 2 years. Extreme competition to be at the top means the cost per acquisition is now impacting your budget heavily.

Looking at an effective inbound marketing strategy will reduce your reliance on paid for advertising, improve your ROI and, as a bonus, you’ll benefit from that return customer who is up to 9 times more likely to convert than a first time buyer!

Allocating your budget

You’ve taken the plunge and are committed to kicking off a retention marketing strategy for your eCommerce business, so, what about budget?

Typically, an eCommerce businesses customer base is made up of only 8% repeat customers, the rest are first-time buyers and general browsers, BUT, these 8% of repeat customers can represent up to 40% of your revenue!

It may be a surprise to you that this powerful group represent so much of your revenue, what’s more surprising is that the average eCommerce business allocates nearly 80% of its budget to acquisition but only 20% to customer retention! (source LinkedIn)

Take a look at your budget, is the allocation right for you? Maybe you need to rethink your spend and push more to customer retention..

How to start Retention Marketing

A great place to start is to calculate the figures for your business:

  • Repeat customers
    • The percentage of your customers that are revisiting your website – look at the number of repeat customers and divide it by the total number of unique customers. As your Retention Marketing strategy kicks in, you’ll start to see this figure increase.
  • Buying frequency
    • How often your customers make a purchase is known as the buying (or purchase) frequency. Take your total number of orders and divide it by your total customers. Small increases in this percentage can make a big impact on your revenue.
  • Customer lifetime value
    • How much is each customer worth to your business? Take your average order value x your purchase frequency x your customer average lifespan = Customer lifetime value (average lifespan may be a tough one but work on 1-3 years depending on your business)

Monitor your performance

It’s easy to look at other businesses figures and worry that yours aren’t as good but just concentrate on yours and get your initial figures ready, and work on improving them. Dont be too impatient, the figures will improve, monitor them as time goes and you’ll reap the rewards.

Choosing the right tools for Retention Marketing

These will be different for every business, what do you sell, who are your customers and what is your business strategy. No single tool will work alone, better to use them in a complementary fashion.

Take a look at these for starters:

Customer service

Amazing customer service is key to delighting your customers and one of the biggest single items that will contribute to customer retention.

If there shopping experience wasn’t easy, enjoyable and fast, whatever their device, they probably won’t come back. This should be the very first thing you look at and decide, is it good enough?

Support solutions

Helping you provide the above excellent customer service.

Using your support systems to answer post-sale queries and handle them appropriately can provide the nurturing your customers need. We dont all get it right every time but the way you handle a poor experience can turn round a negative into a positive!

Online chat software can help resolve issues immediately before they need escalating.

Retention emails

Using email marketing to sell your products is almost certainly common for you right now, so why not use it to market to existing customers and encourage them to come back again and again?

How long is the normal time between customer orders, is there an average time? Knowing this can help you know when to market to these regular customers, give them a polite nudge, tell them you miss them and what you can offer them.


You already know your customers name and email address so don’t send them an email with ‘Dear customer’, use personlisation so they dont feel they are just a number and falling into your generic marketing.

Look at cross-selling based on their previous purchases or recommendations because they bought product ‘X’

Loyalty programs

If you tell me I can earn discounts by continuing to spend, why wouldn’t I come back?

Using a reward scheme based on purchase history, volume and regularity of spend will improve the profitability of your customer and that all important customer lifetime value.

Showing them the status of their program and the ‘points’ they have accrued, will promote additional sales – we all love a bargain!


Take a look at your marketing budget and where the spend goes, customer acquisition v customer retention, you may be surprised.

It’s never to late to make a change and shift that budget into nurturing existing customers, making the come back and spend again.

Turn those repeat customers into your product evangelists, make them happy with excellent customer service and products and they’ll transform your business.

To investigate your Retention Marketing strategy or even look into your effective eCommerce website development, arrange a call back with one of our team.