What do the most successful brands have in common? They know how to retain customers. Top brands like Apple, Zappos, Peloton, and Ikea masterfully deliver exceptional customer experiences and foster loyalty. These factors drive high customer retention rates in ecommerce.
But how do they do it? What strategies are they using—along with thousands of other successful small and medium-sized ecommerce companies—to keep customers engaged and loyal?
They implement proven retention strategies to keep customers happy and returning.
What Is Ecommerce Customer Retention?
Customer retention in ecommerce involves motivating customers to continue buying from your online store. The goal is to capitalize on existing customers to drive repeat purchases and increase sales. Since these buyers are already familiar with your brand, retaining them is generally more cost-effective than acquiring new ones.
Why Is Customer Retention So Vital in Ecommerce?
xcelling at customer retention is critical for ecommerce brands because the online marketplace is highly competitive and continues to grow. By 2029, U.S. consumers are expected to spend $1.8 trillion online, up from $1.2 trillion in 2024.
Additionally, millions of new stores launch every year, creating more competition. From 2022 to 2024, the number of ecommerce stores worldwide grew by 25%, surpassing 30 million.
By prioritizing customer retention, your business can maintain and grow its customer base, increase sales, and stay ahead of competitors.
What’s a Good Customer Retention Rate for Ecommerce?
Retaining between 20% and 40% of customers puts you around the average for online sellers.
According to contact center software provider Sprinklr, the average ecommerce customer retention rate is 38%. Decile, a marketing data and analytics solution provider, calculated retention rates by industry for ecommerce companies in 2023:
- Fashion and apparel: 19%
- Food and beverage: 23%
- Health and beauty: 21%
- Home goods: 12%
Ecommerce retention rates tend to be lower than in industries like banking and telecommunications, which retain over 70% of their customers. Because the online marketplace continues to expand, it’s harder to retain customers than in other industries. That’s why implementing the right strategies is crucial.
7 Effective Customer Retention Strategies for Ecommerce
Endear customers to your brand with these powerful customer retention strategies:
1. Personalized Marketing
Give your customers what they want—sometimes before they even realize it—and watch your sales, average order value (AOV), and customer lifetime value (CLV) soar.
Use AI features on your ecommerce platform to personalize product recommendations, web content, and chatbot messaging. For example, if a customer shops for a sweater, show them a matching pair of shoes.
Personalized email campaigns can also re-engage past buyers. Automate email offers and discounts based on purchase history to keep customers returning.
2. Loyalty Programs
Ecommerce loyalty programs, such as reward systems for frequent shoppers and VIP membership perks, boost customer loyalty and retention. They work because of human psychology.
Receiving rewards fosters reciprocity, encouraging continued engagement. Additionally, dopamine, a brain chemical linked to pleasure and motivation, is released in anticipation of rewards—one reason why the average U.S. consumer actively participates in nine loyalty programs.
Gamification elements, like points and levels, further enhance engagement and customer retention.
3. Exceptional Customer Support
Work to improve your customer support to help prevent churn. Whether it’s difficulty returning an item or not being able to resolve an issue quickly, one bad experience can cause even a loyal customer to leave your brand. One study found that 65% of consumers had left a brand because of a poor experience.
Improve customer support with:
- AI chatbots for instant assistance
- 24/7 customer support agents
- Conversational voice AI agents (e.g., Bolna, Vapi) that handle multilingual inquiries
4. Subscription Models
Subscription models drive sales growth in ecommerce and customer retention. When a brand makes it attractive to sign up for recurring purchases, customers gain the convenience and other perks of subscriptions — such as lower prices or free shipping — for items they regularly buy, like beauty and cleaning products.
Skincare brand Kate Somerville saw a significant increase in customer loyalty and sales after a redesign of its ecommerce solution and the launch of its auto-replenishment service.
Mary Ruth’s is another subscription success story. The supplement brand went from $700k in debt to $100 million in revenue in a few short years. A big part of Mary Ruth’s success is its online subscription purchases, which account for about 30% of all revenue.
5. Social Proof and Reviews
Social proof from user-generated content and online reviews helps build trust.
Ecommerce brands can use tools like Yotpo to collect and manage:
- Customer reviews
- User-generated photos and videos
- Loyalty and referral programs
Feature customer content on your website to provide social proof and reinforce credibility.
6. Data-Driven Retention
A data-driven approach can also boost ecommerce customer retention by enhancing the customer experience. First, you can use customer behavior data from your ecommerce platform to predict churn and then make changes to help prevent customers from leaving.
For example:
- Heat-mapping tools can identify pain points, like a frustrating checkout button, so you can make improvements.
- Customer segmentation allows you to tailor pricing, offers, and messaging for different user groups.
You can also use data to segment customers into groups and then customize their experiences. HD Supply, an industrial distributor, automates tiered pricing in real-time, ensuring customers see accurate rates without complex calculations.
7. Post-Purchase Engagement
Nurturing customers post-purchase helps to keep your brand top-of-mind, so the next time they need your products, they’ll return to your online store to buy. You can also send follow-up emails, SMS messages, and other communications with personalized offers and recommendations to drive more transactions with your existing customers.
The Link Between Customer Experience (CX) and Retention
Ecommerce customer experience (CX) and retention rates go hand in hand. The strategies above work to improve customer retention because they enhance CX. With this in mind, ensure a great experience at every stage of the online shopping experience to keep your customers pleased with your brand.
Here are three things you can do to elevate your CX:
- Simplify the checkout process: Streamline checkout with features like one-click checkout and multiple payment options.
- Optimize for mobile: 60% of shopping behavior starts on mobile, so you want to offer a great user experience on mobile as well as desktop. Make sure your website is mobile-responsive and test browsing, checkout, and other features on mobile devices.
- Offer fast and free shipping: Consumers want fast and free shipping. In fact, one study found that 81% will spend more to meet the free shipping threshold. Consider offering these perks and ensure your shipping policy is transparent in your checkout process.
Keep Your Customers Coming Back with Exceptional CX
In ecommerce, you don’t have the advantage of an incredible location or local brand awareness, and you’re competing with a growing number of online merchants. What you do have, however, is the potential to build an exceptional customer experience that can increase retention and customer loyalty.
Guidance can help design and build the type of customer experience that will keep your buyers coming back to your online store. Contact us today to discuss how we can help your ecommerce brand develop a better CX.
