Increase customer retention of my webshop

Increase customer retention of your webshop? Customer retention is the extent to which customers come back again in a certain period of time. Customer retention is also referred to in marketing terms as the Customer Retention Rate or CRR. If customers come back more often, it generally means that they are satisfied with your product and with customer service. A high customer retention also ensures a high Customer Lifetime Value, a higher customer value over a certain period of time.

In this article I will explain how you can calculate and increase customer retention.

Calculate customer retention

When calculating customer retention or CRR, you need three values:

  1. the number of customers at the end of the period (End)
  2. the number of new customers in the period (New)
  3. the number of customers at the beginning of the period (Start)

What we can deduce from these figures is how often the number of customers has come back or is still a member of the subscription to your product.

You can calculate customer retention as follows:

CRR = ((End – New) / Beginning) x 100%

Customer Lifetime Value CLV

Customer retention example

Based on this calculation, I have made an example for you. I use a local butcher for this and take a period of 3 months.

  • 1 January 2019 – 1 March 2019 – 1000 customers (Start)
  • 1 March 2019 – 1 June 2019 – 1100 customers (End)
  • 01 March 2019 – 1 June 2019 – 300 customers (New)

CRR = ((1100 – 300) / 1000) x 100% = 80%.

In 1 quarter, 80% of the customers returned to the butcher. If this percentage was 85% last quarter, it generally means that people are less satisfied with the product or with the butcher :).

So the trick is to increase this percentage.

Increase customer retention / Increase customer retention rate

You can increase customer retention by basically using the same methods as increasing customer lifetime value:

  • improve your company’s customer satisfaction. Make use of reviews, take the time to read them and immediately improve your company based on the feedback.
  • increase the quality of your product. A good product you can ask a higher price for which increases the order value.
  • use a loyalty program, such as a savings promotion, savings card, loyalty points system
  • set up a retargeting campaign to visitors who have purchased from you. Show related products to what they have previously purchased or the same product if it is a repeat purchase.
  • use email marketing to re-engage customers. Use a CRM package such as Active Campaign for this.
  • send a personal letter or email to start a new conversation with the aim of expanding the collaboration.

Having existing customers come back more often is easier and cheaper with marketing than letting new customers come. Existing customers know you and know more about your product than a new customer.