Retaining Customers as an Ecommerce CEO

Retaining Customers as an Ecommerce CEO

retaining customers

In today’s world, building an ecommerce site from scratch, is fairly easy. The platforms to start such sites are easily accessible and quite versatile. Some are complete “out-of-the-box” solutions, and some are a bit more extensive. However, using a platform and simply just setting up an ecommerce site is just not enough. Retaining customers is what will keep your business alive. You need to REALLY know your business, your numbers, or you will end up having a short-lived entrepreneurial venture.

There are two, very important questions you should be asking yourself when building an ecommerce site.

 #1: Are we making money right now? Is it more than last year?

This first question is actually quite common, since every CEO wants to know whether or not they are making money. That’s what a business is for, right? In the ecommerce market, making money means you need to:

  •  Attract Buyers of your targeted demographic

To attract buyers, website traffic will be your most basic indicator of who’s coming to your site. An analytics program can offer you this most elementary metric. Do keep in mind that not all traffic will convert. SEO typically generates the best quality traffic.

  • Upsell and increase profits.

In order for you to be able to upsell and increase profits, you need to make a distinction. Users may simply come to your site and buy cheap, low-margin items – only to move on. You’ve attracted some traffic, yes. You can even say you’ve “converted” these visitors. But in this case, your profits will be low. Up Selling the right items to visitors is a notion which is deeply ingrained in the ecommerce world.

You may need to incorporate some upselling tactics. You need to make a distinction: What if your users simply come onto your site and buy only cheap, low-margin stuff — then move on? You’ve attracted traffic, sure; you’ve “converted” these visitors, even. But your profits are low. The notion of upselling the right items to your visitors is deeply ingrained in ecommerce psyche. So, you may need to incorporate some upselling tactics such as: adding accessories onto your product page sidebar and the bottom of your page, the cart page, & checkout page.

The objective is quite simple: Provide accessories relevant to each product. If an accessory isn’t related to your product, a visitor won’t add it to their cart. But that user might be interested in purchasing similar items. The goal is to achieve a higher AOV (average order value ), for your site. The higher the AOV, the higher your gross merchandise value.

  • Remain profitable; keep costs under control

Keeping costs under control and remaining profitable, entails smart marketing. Integrating smart marketing and keeping a close look at how much each marketing channel costs you, cross referencing it against the number of new customers that these channels bring you, can help you arrive at your cost per acquisition. Note: The lower your CPA costs are, & the more efficient your marketing machinery is, the more likely you are to beat out competition.

retaining customers

 

#2: Do our customers love us?

For the second question, “Do our customers love us?”, every smart CEO knows that sales are transient. What actually matters is whether or not you’ve built a connection between your brand and it’s users. Brands with large a loyal customer base depend on a steady flow of revenue, little competition, and higher profitability than less established brands. Your goals should be:

  • Keep customers coming back

To make sure customers are coming back, you need to attend to your retention rate, which measures the adhesiveness of your brand. The ratio of customers who remain with your brand over a pre-determined period of time, versus the original number of customers at the beginning of this time period, gives you your retention rate.  Let’s say you began May 2015 with 1200 customers. You acquired 100 new customers in June. However, 25 customers stopped buying from you in the same month. This means that your retention rate for May was:

[{(1200+100)-25}-100]/1200 x 100 = 97.9 percent

Retention Rate Formula

Retention Rate = [{(X + Y) – Z} – Y]/X * 100 

X = initial customers

Y = New customers

Z = Customers you’ve lost<]

  • Encourage customers to be generous with their time and money

To encourage customers to be generous with their time and money, you need to consider that a customer may stay with your brand forever, as a loyal advocate. However, getting that person to keep spending generously is important, too. Simple tactics like customer rewards & possible discounts, (making them feel like they are getting VIP treatment), can help ensure your valued customers are actually spending on your site.

  • Integrate customer nurturing

This task plays a pivotal role. Customer lifetime value determines how valuable a customer is to the business longterm: Is the individual worth pursuing? Will the individual give us the ROI (Return On Investment) we seek? Will the individual spread the word and win us more customers? Note: If you have loyal advocates of your brand already, you can maximize your revenue by implementing a social sharing solution to increase sales. retaining customers

– These tips and tactics can be applied to help retain customers. Leave any questions or examples of how you have built your site to retain customers below in our comment section!

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