Increase the Frequency of Your Online Store

‍
In the pursuit of acquiring new customers, retaining existing ones often gets completely overlooked. Nothing proactive is done to (re)activate this group, even though this lever is extremely powerful.

Most webshops have little to no profit on a first sale and only start earning on a second purchase. This happens when they can encourage existing customers to buy again through a cheaper channel.

Let’s take an example:
Suppose the cost of acquiring a customer is €15.
The average order value of their purchase is €30.
Your cost price is €15.
Your profit at that moment is a simple calculation: €30 - €15 - €15 = €0.

However, if you can get a customer to return to your webshop via a low-cost channel like email, the picture immediately looks much better.

A second order for the same product would look like this:
The cost (for email) is practically €0.
The cost price is €15, and the average order value remains €30.

In this case, you have: €30 - €15 - €0 = €15 profit.
The profitability of your business has just increased significantly.

So, to make more profit—profit you can reinvest to acquire even more customers—you need more returning customers.

In a study by Harvard Business School, it was shown that a simple 5% increase in customer retention can lead to a 25% to 95% increase in your profit.

Another study by American Express found that returning customers buy both more frequently and in larger amounts than newer customers, and this same group is much more likely to give referrals.
‍

Lastly, depending on which research you believe, acquiring a new customer costs between 5x and 25x more than what it costs to retain an existing one.

You might think, "Great statistics and studies, Omar, but how is this going to help me? How can I ensure that I achieve higher retention?"
First and foremost, make retention a priority!

Retention is often overlooked by many entrepreneurs because they think it's just a byproduct of customer experiences, like providing good service. “We have great customer service, customers love us, so we have a 12% repeat customer rate.”
That’s nice, but you can also approach it proactively.

To get started with retention, always ask yourself: What will my customer need (again) in the future? What is a recurring need?

Think about offering complementary products, recommending items that are a good addition to what they’ve recently bought, sending monthly reminders to restock products, or implementing a loyalty program where they can earn points.

For example, if a customer has purchased a new tennis racket but not new tennis balls, you can send an email about tennis balls a week later!

Want to take it a step further? Explore opportunities to add a subscription model to your webshop.

If you’re not yet proactively optimizing your retention, you’re leaving money on the table. This lever is the most powerful! Make it a priority and get started.