How to solve e-shop customer retention in practice?

Acquiring a new customer is 5x more expensive than keeping an existing one. Nevertheless, only a minimum of Czech companies fully address customer retention. Its full employment entails a number of obstacles. However, it is the only long-term way to continue growing in the mature e-commerce market.

When you are starting a business and conquering your territory, you very often get customers only by your growth. So you usually don't need to solve retention from the beginning. This approach was reinforced by the record growth of Czech e-commerce, which, according to the estimates of the Association for Electronic Commerce, could exceed 25 %. But this also brings with it its own pitfalls. "Because e-commerce kept growing, it generated new customers and there was very little need to increase the profitability of existing ones," mentioned our CEO David Vurma in an interview for the magazine Mladý podnikát. Hear more in the interview David Vurma on customer retention.

At the same time, this performance view has caused many companies to evaluate marketing activities only through simple metrics such as PNO or ROI. In this area, however, a distinction must be made between efficiency and effectiveness.

Efficiency it's about focusing on the easiest catches. Quick and easy wins. You focus on small activities with high returns and track metrics such as PNO, ROI or CPA.

Efficiency it's about achieving your business goals and gradually increasing them once you've achieved them. You want to maximize them and you monitor metrics like the amount of goods sold, revenue and so on.

The situation ultimately leads companies to a stage where they either do not deal with retention or buy some "box solution". For example, an attribution model or a loyalty program, because with them it is easier to evaluate the effectiveness. The problem is that if you bring these tools in isolation to a business accustomed to a performance marketing environment, they won't work for you. "Clients will not be able to evaluate their benefits, because they monitor everything according to efficiency metrics such as PNO, yield and the like. The tool will then be expensive for them, they will not be able to evaluate its benefit and they will turn off the system anyway." points out Vurma.

Customer retention is a company ideology whose goal is to build a relationship with the customer that will be financially beneficial for your company. You will strengthen him with trust, support, respect and recognition. For this approach to work, you need to transfer it to the entire company through all customer contact points (so-called touchpoints).

It stands on these pillars:

1) Customer trust in your company

2) Awareness of the purchase process

3) Manifestation of appreciation and exceptionality of the customer

4) Personalization of content

5) Customer engagement

6) Arousing targeted emotions

Although it would be ideal for the company to implement this approach from the very beginning, in Czech conditions it is more of a utopia. Mostly it needs some external impulse. "This is most often due to the flattening of the acquisition curve, when the price for a new customer ceases to be bearable," adds Vurma.

To get started with customer retention, he recommends:

1) Clarify the difference between efficiency and effectiveness.

2) Collect data about your customer database.

3) Categorize your customers according to their shopping frequency.

4) Learn more about what the selected customer categories have in common.

5) For each customer group, determine which touchpoints it passes through and what to communicate on them.

6) Start experimenting.