Ecommerce Marketing

7 Customer Retention Strategies That Will Boost Your Revenue By 220%

Drew Sanocki / 8 min read
Customer Retention Strategies

There are only three ways to grow revenue at any business:

  1. Increase the average order value (AOV).
  2. Increase the frequency of purchase, or the average number of times each customer buys from you.
  3. Increase the total number of customers.

I call these the three Revenue — or retention — Multipliers. In my experience, 90% of online businesses focus 90% of their time on number 3, meaning they put all their energy into getting more site traffic and more conversions.

These businesses completely neglect hacking their average order value and overlook the importance of customer retention.

But if you’re doing $1 million to $30 million a year and haven’t tapped into AOV or customer retention, you’re missing out on significant opportunities.

You’ve already got customers after all. You spent the time and money to acquire them.

So why not mine that data and generate more revenue off that existing asset?

The benefit of focusing on all three Multipliers is that you don’t have to knock the ball out of the park on any one of them to double your business in a year. Just a 30% increase in each Multiplier — which is more than doable for most businesses — yields a 220% increase in revenue.

  • Can you increase your AOV 30% in a year via cross-selling and upselling opportunities? If you aren’t doing this, this should be easy.
  • Can you increase your customer retention and get customers to buy 30% more frequently than they have in the past? Again, this is straightforward if you haven’t focused on it.
  • Can you attract 30% more customers? Well, this is the easiest Multiplier . . . you can always do this just by paying for the traffic.

You do all three, and here’s the resulting math: 1.3 x 1.3 x 1.3 = 2.2. That’s a 220% increase in revenue — all from focusing on retention rate.

The Three Multipliers approach gives you a simple analytical framework for thinking about growing your business. It the framework I used to grow my own retailer ($0 to $1 million in a year) and one I used most recently as CMO at (a previously 9-figure retailer that had descended into bankruptcy).

It also comes with a dash of common sense. More customers coming back means higher customer satisfaction, which also rises the tide for channels like referral and direct.

By concentrating on the customer relationship and how to give them more value, you’re doing right by them — and your bank balance.

Once you get the math, it’s time to focus on some implementation. Here are my top customer retention strategies for increasing each of these Multipliers 30% in 2017.

1. Raise Your Prices (Multiplier #1)

Robert Smith runs Vista Equity Partners, the world’s top performing private equity fund with $30 billion under management.

When he started the company in 2000, he had a very simple idea: raise prices.

He suspected that most entrepreneurs undervalued their services and were afraid to charge more. So he created a fund that bought out these entrepreneurs and then increased what they were charging.

It worked.

His premise holds true in ecommerce, too.

In 2015 when we took control of Karmaloop, we immediately increased the price of a standard blank t-shirt 20%. Revenue went up 20%. Even for white t-shirts––which you’d think would be commodity products with plenty of alternatives –– revenue increased.

So we tried it again. And revenue went up. Again.

This retention strategy obviously works better if you’re selling a proprietary product. But then again, if it worked with t-shirts, it still can work with pretty much anything.

2. Cross-sells and Upsells (Multiplier #1)

Cross-selling (encouraging the customer to add related items to an order) and upselling (encouraging a customer to upgrade to a higher-priced item) work.

How much?

In 2006, Amazon attributed over 30% of its revenue to its cross-selling and upselling efforts.

If you aren’t doing any cross- or upselling, you could be leaving an easy 30% on the table.

You can cross-sell and up-sell in most shopping carts on the product page, in checkout and on the checkout success page. All three worked well for us at Karmaloop, and it’s pretty straightforward to set up. With BigCommerce, it’s even integrated into the platform.

customer retention strategies

This store is using a Free Shipping cart-level discount at $100 to increase AOV per customer with a discount incentive. See below for how customers are incentivized all the way through to the checkout page.





BigCommerce customers can setup multiple out-of-the-box discounts to up-sell customers or reward them for positive purchase behaviors.

But what if I only have one product?

Don’t have related products to entice the customer? Consider what I call a “premium service upsell.” Here’s how they work…

A friend of mine runs an art store making low seven figures a year in revenue.

Her one product? Framed prints. Average order size? $300.

To create a natural upsell for her, we created a service. The idea is that when high net worth customers are checking out with a piece of art, their bigger challenge is often decorating a space. So we solve that problem by offering an art advisory service.

The service would consist of a few one-on-one Skype calls with an art advisor. During the calls the advisor would explore the customer’s apartment and make personalized art recommendations.

The service itself was easy to create. We made a quick product page and priced the option at $1000. We added it as an additional purchase option at checkout. If customers took the option, we’d email a Calendly link to schedule the call.

Did every customer take the $1000 upsell? Of course not. But some will, and those few will drive her AOV north.

In fact, if only 10% of the customers take that $1000 upsell, she’s increased her AOV by 30% — 10% x $1000 = $100, which is a third of $300.

Want an even quicker solution? Find a non-competing service provider in your space, and strike a quick affiliate deal with them. Offer their service to your customers, and by the end of the week you should see a higher AOV.

You can also build upsells and cross-sells into your customer service process. When a customer makes an inquiry, your representative can make product recommendations at the end of a call with a positive outcome. More sales equals higher retention, and getting movement from your customer service team is the sign of a strong business.

Loyalty and retention programs are another way you can incentivize customers with up-sells and cross-sells.

3. Offer a Subscription Service (Multiplier #2)

I talk about subscriptions a lot when I talk about increasing the average number of purchases per customer.

Subscriptions are the bread and butter of retention marketing. It’s just a great way to retain customers and build an automatic lever for keeping customers coming back.

A lot of times, it’s not obvious if you don’t have a business that has a clear subscription play to it. Not everybody sells razor blades and can leverage this customer retention strategy.

That said, most businesses still neglect the customer retention potential here. Think of a recurring fee for customer service or extended warranties. If you can figure out a way to tap them for your business, you can start chipping away at a higher frequency of purchase.

In BigCommerce, you can use a couple apps to do this. Automated Recurring Billing and Subscrimia are two of the most popular. Here is how Subscrimia works on a test site:



4. Create More Multibuyers (Multiplier #2)

One of the best ways to improve your retention is to turn your one-time-buyers into “multis.”

Most ecommerce companies have the 80-20 rule in effect. Twenty percent of your customers are drive 80% of your revenue. And for most of you, this 20% consists of your multi-buyers . . . those who buy more than once.

This is a huge lever. Think about it: 80% of your buyers are one-and-done. They cost a lot to acquire, and the payoff is a super low lifetime value.

Zero in on this lever. Try to turn more one-time-buyers into multis.

To do this, analyze the behavior of your current multi buyers. Get customer feedback. Customers follow standard purchase behavior. You may find that most multi-buyers execute their second purchase at a standard average time after their initial purchase. The technical term for this is the “second purchase latency.”

Find yours. Then create incentives that “grease the skids” to this second purchase. Here’s how…

If the typical multi buyer executes his or her second order 30 days after the first purchase, this dictates two things:

  • First, before those 30 days are up, you should not “go promotional.” Do not offer discounts to a second purchase, as this recent customer is still likely to come back and buy again without incentives. Instead deliver automated email sequences that show other items to purchase . . . at full margin.
  • Second, after the 30 days are up, if the same customer has not executed a second purchase, “go promotional.” Here’s where you start offering offers to encourage that customer to buy again, as she is becoming less and less likely to ever come back. I love the discount ladder approach wherein you offer increasing discounts over time. At 45 days since the first purchase, say, you offer that customer 10% off her next purchase. At 60 days, you offer 20%. And at 90 days, you offer 30%. If the customer buys, she falls out of the sequence. This type of sequence can easily be automated with your email software.

Do this and you are a developing simple, powerful retention program that will print cash for your business. These campaigns are easily the most profitable I ever run.

Don’t like discounting? Instead of percentage discounts, use “offers” of increasing values — free gifts with purchase, expedited shipping, things like that.

The idea is still the same: keep your one-time buyers from defecting, and preserve your promotional dollars at the same time.

5. Put Your Receipt Emails to Work (Multiplier #2)

Quick quiz: what’s the number one most opened email for any retailer?

Answer: the order receipt.

And yet most retailer neglect this obvious promotional mechanism.

Order receipts are a great opportunity to add in some cross-sell offers to categories that the customer might not have seen. There’s an app called Conversio (formerly Receiptful) that I’ve used for this, and you can one-click add it to your ecommerce platform.

In general, playing around with your purchase receipts is a great way to get another purchase and increase overall purchase frequency. One tweak of the order receipt at Karmaloop generated over $2 million incremental revenue for us.

6. Personalize Your Site Experience (Multiplier #3)

When most people think of Multiplier 3 –– “more customers” –– they think in terms of more traffic.

But “more traffic” is expensive. Instead, the easier route to more customers is usually optimizing your site better for conversions. And the biggest opportunity here is in personalization, segmentation and targeting based on key customer segments.

Start by figuring out what kind of customer is looking at your site based on what product pages she is looking at, what piece of content she’s consuming, or what customer acquisition channel created her. Then deliver a very different user experience to her when she comes back to your site.

The messaging can change, but also, the merchandising can change.

Companies that make use of this type of personalization can often double conversions off of existing traffic.

Lots of this enterprise-level personalization is available inexpensively through email service providers like Drip and Klaviyo. Using either application, you can develop user segments based on browse activity, then target those segments with “browse abandonment” email campaigns.

7. Use Email and Facebook in Concert (Multiplier #3)

Another great way to drive your conversion rate up is by thinking beyond the standard on-site CRO stuff.

In my experience, A/B testing button colors or layouts takes just too long to move the needle. Even at Karmaloop, with one million organic visits per month, A/B tests were taking too long.

Instead, think of your site as a “mousetrap.” If a first-time visitor does not convert, try to get that visitor to opt-into your list. Then deliver an email welcome series to them to encourage an initial purchase.

If the same visitor ignores your email opt-in, you can still touch that person on Facebook through your retargeting efforts (read more retargeting best practices here).

If you are able to deliver the same offer on-site, via-email, and on-Facebook, you will see your conversion rates skyrocket. Email service providers like Klaviyo simplify this effort as they allow you to sync your email segments to Facebook custom audiences.

Too many retailers treat all these channels as separate entities. Don’t fall into that trap. By mirroring your messaging across more and more channels, you approach the marketing holy grail of “right offer to the right customer at the right time” . . . no matter where that customer is.

We all want to grow, faster.

The worst thing you can do, though, is read a bunch of blogs and go to a bunch of conferences and fill a notebook with reams of tactics, ideas, and half-baked customer retention strategies. All too often this only results in stress and overwhelm.

Instead, take a step back and think through your Three Multipliers. It doesn’t matter if you’re selling tens of millions’ worth of product, or a small business just starting out.

From there, brainstorm some favorable tactics within each multiplier. I’ve given you a few of my favorites in this article. Prioritize the “back of the funnel” Multipliers like AOV and Retention before you shell money into more Facebook ads.

Above all, keep in mind that “pressure over time” is what wins in e-commerce. It’s rare that a single marketing tactic will catapult your business into the stratosphere. There are no silver bullets. What wins is a disciplined approach to improving each of your Three Multipliers.

Get more out of your customers and reduce churn rate.

And happily, your efforts will compound and result in profitable growth.

Want help implementing these and other killer marketing & retention tactics?

Drew will be holding a workshop on lifecycle marketing automation in San Diego in March. The two-day workshop is aimed at helping ecommerce companies using Klaviyo to fully exploit the application and automate their growth. For more details, check out the Brand Growth Experts application page.

Want more insights like this?

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