Customer retention and customer loyalty are crucial for Shopify merchants to drive sustainable business growth and maintain a competitive edge in the marketplace. Businesses nowadays often invest huge amount of money into acquiring new customers but forget to focus on existing customers, who can help them reach revenue goals more cost-effectively. Therefore, in this article, we will introduce a curated list of 10 actionable tactics, designed to help Shopify merchants nurture their lasting relationships with customers.
Customer Relationship management on Shopify#
Retention vs. Loyalty: What is the difference?#
First and foremost, we should understand the definition of customer retention and loyalty to see how these two factors are different and related to each other.
Customer retention means how many customers stay with the business over a certain time. This factor is also related to the ‘churn rate’, which is one of the most important metrics for all online or in-store businesses. But keep in mind that customer retention rate highlights the percentage of customers who stay with you, while churn rate is the percentage of customers who leave.
Meanwhile, customer royalty indicates his or her predisposition to choose a business over thousands of other competitors out there. A high rate of customer loyalty means that a customer will consistently respond positively to a brand and also be willing to engage.
How to measure customer retention and customer loyalty?#
Customer retention#
There is a simple formula to calculate to customer retention rate (CRR), which consists of 3 main elements: the number of customers at the beginning, the number of customers at the end, the number of new customers during the measurement period.
Retention rate (%) = (Ending customers - New customers)/ Beginning customers
Customer loyalty#
When it comes to customer loyalty, it is more difficult to measure than customer retention rate because loyalty is an emotion. However, there are a few metrics we can use to grasp a basic understanding of the customer loyalty level. Some of the most common metrics are:
Net Promoter Score (NPS)#
Net Promoter Score is used to measure customer loyalty based on their tendency to recommend products or services to other people. Here is how the formula looks like:
NPS = (% Promoters) - (% Detractors), in which:
- Promoters (score 9-10): Customers who are highly satisfied and likely to recommend.
- Passives (score 7-8): Customers who are somewhat satisfied but not willing enough to promote.
- Detractors (score 0-6): Customers who are dissatisfied and may spread negative word-of-mouth.
Ranging from -100 to +100, the NPS score is considered to be generally good if it is above 0. The higher the score, the better it is!
Customer lifetime value (CLV)#
This metric estimates the total revenue a business can expect from a customer throughout their relationship. This is one of the must-have metrics for any Shopify merchants nowadays.
The formula looks like this:
CLV = Average Purchase Value × Average Purchase Frequency × Customer Lifespan.
In which:
- Average Purchase Value: This is calculated by adding up the total revenue from all purchases and dividing by the number of purchases
- Average Purchase Frequency: Find out how often customers make purchases within a specific time frame (e.g., monthly, annually) by dividing the total number of purchases by the number of unique customers.
- Customer Lifespan: Estimate how long a customer is likely to continue purchasing from your business
Understand Customer Lifetime Value and how to improve this metric
Customer Engagement Score (CES)#
In order to measure how engaged customers are with several aspects of your business such as products, services, we use this CES metrics, which is also an effective way to measure customer loyalty on Shopify.
Before diving into the formula, we have to identify which are the engagement touchpoints that your business is using. Some touchpoints can be:
- Shopify store visits
- Email opens
- Product purchases
- Social media channels
After that, we assign a weight on a scale from 1 to 10 for each touchpoint based on how important it is to your business goals and objectives. For example, a purchase might have a weight score of 8, while a social media like accounts for only 1.
Then, to count the number of events, we can use event tracking tools and see how many users interact with your Shopify store. Therefore, it is vital to set up store analytics right from the beginning.
Having all of these inputs, now the formula for Customer Engagement Score (CES) looks like:
Customer Engagement Score = (Weight event 1 x Number of events 1) + (Weight event 2 x Number of events 2) + …
10 Proven Tips For Customer Retention And Loyalty On Shopify#
Tip 1: Tailor the shopping experience#
Having important aspects of your Shopify store customized for specific needs of the target audience is the first tip to improve your customer retention rate. One way to create a personalized and memorable shopping experience for customers is through product recommendations.
Fortunately, Shopify Partners offers various apps and tools that allow merchants to analyze customer data and behavior to recommend products that are relevant to each shopper. For example, with Wiser Product Recommendations, merchants can understand customer browsing history, purchase patterns, and preferences to suggest products that align with their interests.
A great example of brands customizing shopping experiences for customers on Shopify is BlendJet. This Shopify-based business sells portable blenders and it usually recommends products based on what customers have previously viewed or bought. For instance, if a customer adds a portable blender to their cart, BlendJet might suggest additional accessories like travel cups or silicone sleeves to enhance their drinking experience.
Tip 2: Create a rewards program#
Creating a rewards program on Shopify is a powerful strategy to encourage repeat purchases, foster customer loyalty, and drive engagement. With Shopify's app partner system, merchants can easily set up and manage their own rewards programs that are suitable for their style and branding image.
Some popular apps for merchants to create reward programs include Smile: Loyalty & Rewards, which has nearly 5,000 reviews and an average rating of 4.9 or Yotpo, another famous reward program provider on Shopify. These apps can be integrated seamlessly with Shopify stores and allow merchants to design their unique programs that offer rewards, discounts or exclusive perks for customers.
Tip 3: Offer 24/7 customer support#
Customers will easily trust brands that can offer them around-the-clock assistance and make them feel like their problem is handled carefully. Thanks to Shopify’s various support tools, merchants can now resolve customer issues promptly and increase customer retention by multiple times.
Apps like Gorgias or MooseDesk enable merchants to add live chat widgets to their Shopify store, manage all of customer tickets within one dashboard and enjoy other handy solutions to support their customers.
Gymshark, a successful Shopify brand specializing in fitness apparel, offers 24/7 customer support through live chat on their store and website. They leverage live chat to address inquiries and offer personalized assistance regardless of any time zone. This proactive approach not only ensures a seamless shopping experience but also helps Gymshark build stronger relationships with their customers and drive repeat purchases as well.
Tip 4: Use email marketing#
This tip may sound familiar with many Shopify merchants as it has been proved to be a powerful strategy to increase engagement, sales and build long-lasting relationships. In addition to the benefits of reaching target audience or maximizing ROI, this tip also helps Shopify merchants to foster their emotional connection with current customers and turn them into loyal fans.
To deploy email marketing effectively on Shopify, merchants usually follow several manual steps, from building a quality email list, segmenting target audience to creating attractive content. All of these steps may be time-consuming, so we recommend using automation tools to streamline these email marketing activities.
Shopify App Store has various types of email marketing apps that can confuse you when you choose an app for the first time. Let’s take a look at some common apps for Shopify merchants, such as Omnisend or Klaviyo. With these apps, merchants can send out regular emails featuring new arrivals, promotions, and exclusive offers, etc. to keep the customrers engaged and eventually made a purchase.
Tip 5: Optimize your website for mobile#
Online shopping via smartphones is on the rise during recent years and visitors to your Shopify are no exception. They look forward to finding the desired products in the most easy and convenient ways and the phone helps them do that in a matter of seconds. This tip is recommended to every Shopify store owners, no matter how big or small your business is.
So how do we optimize the website for a mobile-friendly version? First, select a Shopify theme that is mobile-responsive, which means the screen sizes are automatically adjusted to fit with any mobile device. Don’t forget to optimize the page load speed to ensure your Shopify store loads quickly on mobile devices too. Besides, it is also advised to streamline the navigation and design of your Shopify website by using clear and intuitive menus, buttons, and layouts.
Tip 6: Create interactive content#
Interactive content plays a key role in fostering a deeper connection between customers and the brand. It involves elements that encourage users to actively participate while browsing your Shopify store, which can increase the likelihood of engagement and conversion for your business.
One brilliant way to create interactive content is to build a shoppable lookbook of your products. Having an attractive product gallery will encourage visitors to click on items or make purchases directly. Try this Covet Instagram Feed & Reviews app for a visually appealing and aesthetic vibe for your store. Remember to use concise and scannable text, clear fonts, and a clickable call-to-action button too!
Tip 7: Provide excellent post-purchase support#
Providing excellent post-purchase enables Shopify merchants to improve customer satisfaction, foster loyalty, and encourage repeat purchases. Post-purchase support refers to the service provided to customers after they have completed a transaction, including order fulfillment, shipping, returns, and ongoing customer service.
Among those factors, returns and exchanges seem to be the most common one that usually happens to Shopify merchants. Therefore, when creating returns and exchange policies, remember to provide easy-to-follow instructions and offer options like prepaid return labels or store credits to facilitate the process. To save time and streamline your workflow, try out these Shopify apps on return and exchange:
Tip 8: Over-deliver#
Any Shopify merchants who wish to foster long-term loyalty can try this exclusive strategy. It involves setting realistic expectations with customers and then surpassing those expectations by delivering exceptional products or services. For example, merchants can offer unexpected bonuses or gifts with purchases. This could include free samples, exclusive discounts on future purchases, or personalized thank-you notes. Shopify merchants can use apps like BOGOS to easily add surprise gifts to orders.
Tip 9: Build a strong community of customers#
By nurturing a community around their brand, Shopify merchants can generate more interaction, advocacy, and support among customers, which results in increased brand awareness and customer retention.
An example of a brand that has successfully built a strong community of customers on Shopify is "Pura Vida." Pura Vida is a Shopify-based brand that sells handmade bracelets and accessories crafted by artisans around the world. To entice customers to sign up, Pura Vida created the Pura Vida Club, offering some exclusive perks and limited-edition products through its subscription program. “Subscriptions are one of the most exciting and fastest-growing aspects of our business. It’s also given us a ton of stability that has allowed us to grow with confidence we wouldn’t have otherwise” - said Griffin Thall — Co-founder of Pura Vida.
Tip 10: Gather feedback and track key metrics#
Last but not least, every merchant should understand how to measure customer satisfaction, the effectiveness of their strategies and identify solutions to improve them. By collecting feedback and analyzing relevant metrics, Shopify merchants can make data-driven decisions to take customer retention and loyalty to a whole new level.
The quickest and easiest way to gather feedback is to collect reviews and testimonials on your Shopify stores. You can encourage customers to leave reviews and testimonials on your Shopify website or other platforms like Google or social media. Positive reviews not only provide social proof but also offer valuable feedback that can help improve products and services. Meanwhile, pay attention to feedback and inquiries received through customer support channels like live chat, email, or phone and analyze common questions, complaints, or issues to identify opportunities for improvement and address customer concerns proactively.
Final thought:
In conclusion, by implementing those tips for business growth strategies, Shopify merchants can make their customers stay longer and create a loyal customer base that drives long-term success. As competition in Shopify marketplace continues, it is highly advisable to prioritizing customer retention and customer loyalty to stand out and thrive.
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