The Benefits of Customer Retention for E-commerce Businesses

The Benefits of Customer Retention for E-commerce Businesses

Did you know that you are at least 40% more likely to sell to an existing customer than to attract and convert someone new? That’s because an existing customer already knows and understands your brand values. 

Indeed, your best customers are not those who buy your products once. Your best customers are those who come back to make further purchases. E-commerce customer retention ensures you can build long-lasting relationships with customers. At a marketing level, customer retention focuses on the essential activities and strategies that engage existing customers and build brand loyalty. 

According to studies, you can increase your e-commerce revenue by 25% to 95% if you only focus on increasing e-commerce customer retention by 5%. As you build brand loyalty among your customers, you can see the immediate profit. 

Brand loyalty is integral to customer retention. A whopping 44% of Millennials say they are loyal to their favorite brands. Is brand loyalty a generational thing? It’s a tough question. Over half of Millennials (55%) claim to be more brand loyal than 39% of consumers aged 35+. From Millennials and Gen Z perspectives, it appears that brand loyalty is a generational trend. However, over three-quarters (77%) of customers agree that quality products encourage brand loyalty. The pandemic has contributed to a digital revolution across all generations. As a result, digital brand loyalty is not a thing for younger shoppers anymore. 

With more opportunities to shop online, it makes sense for digital retailers to maximize customer loyalty through e-commerce customer retention techniques. 

Retention is More Cost Effective than Acquisition

Not all buying customers drive the same profit. Marketing strategies understand the difference as they often divide customer acquisition and customer retention. This differentiates a new customer from a returning customer. 

Customer acquisition focuses on attracting new prospects and winning them over. On the other hand, customer retention is a process that occurs after you’ve already acquired new customers. Once you’ve convinced them to buy from you, you want to keep them and ensure they buy again. Both strategies are essential to growth. But it doesn’t mean they are equally effective. 

Your money is best spent on customer retention, as it’s got a higher ROI. But what makes retention more effective than acquisition? Ultimately, you have to understand growth to measure the value of customer retention. 

Acquiring customers doesn’t necessarily drive growth. Winning a customer that doesn’t stay with the brand increases churn rate, aka the rate at which your customers leave. The higher the churn rate, the lower your growth potential. Without customer retention, there is no growth. 

Additionally, gaining a new customer can take a lot of time and effort. In the e-commerce sector, where there are approximately 12 to 24 million active sites globally, surviving is no walk in the park. Less than 1 million sites manage to sell more than $1,000 a year. Relying on existing customers who know your brand can support revenue growth in a competitive environment. The probability of selling to a new customer ranges between 5% and 20% while selling to an existing customer is up to 70% more likely. 

Return Customers are More Profitable

First-time customers are not easy to acquire. It can be a time-consuming and expensive process. On the other hand, returning customers are already familiar with the business. Comparatively, it’s less expensive to keep a customer who has already purchased from you than to gain a new one. While this should not discourage e-commerce businesses from attracting new customers, keeping a large percentage of customers for longer is a more profitable approach. Indeed, return customers generate on average 23% more profitability than average customers.

While return customers are more likely to buy again, this doesn’t mean that e-commerce customer retention is effortless. A satisfied customer only comes back if the business can build brand loyalty. According to a Bain & Company study, up to 80% of satisfied customers don’t buy again from the same business. The reason? They have not built any meaningful connection to the brand. That’s where your customer retention strategy can make a difference and nurture satisfaction into loyalty. 

Regular Customers Provide More Feedback

A loyal customer knows your business, making them the ideal platform for growth. Indeed, returning customers can become a source of insight for the company. For an e-commerce business, customer feedback can provide new strategic paths for growth. It is an excellent approach to understand what your customers expect and to create a better experience. Price is a differentiating factor in online shopping. But customers are willing to pay more for a positive experience. Therefore, existing customers can become your secret weapon for improvement. 

At an e-commerce level, customer feedback needs to match the digital flexibility of the environment. Customers are unwilling to provide feedback if the process is disruptive. Therefore, making the most of your regular customers implies a flexible and digital feedback collection system, such as using social media activities, using online surveys, or directly asking for feedback per email. 

Product reviews are especially valuable for e-Commerce sites. Indeed, a product with only 5 reviews is 270% more likely to sell than one with no reviews, according to the Spiegel Research Center. In other words, your existing customers can encourage new customers. Customers tend to put more faith in online reviews; 84% of people prefer to trust reviews over recommendations from peers. 

Loyal Customers Provide Excellent Word of Mouth Referrals 

Brand loyal customers are more likely to boast about their favorite brand(s). In fact, loyal returning customers are 83% more likely to promote a product based on their experience. For e-commerce businesses, it’s good news. These word of mouth referrals add credibility to the product and the brand. Word of mouth strategies can include an emotional hook as customers get to share their personal experiences. 

But there is more than one way to maximize the positive influences of advocate customers. Referral programs are a popular strategy to leverage existing customers’ networks and gather new information. Combining a referral program with an incentive encourages existing customers to share brand and product information with their friends and relatives, reaching out and potentially converting new audience groups effortlessly. 


If you are only investing in customer acquisition, you are missing out on the many benefits of customer retention for e-commerce. Indeed, customer acquisition is a time- and money-consuming process with a success rate of 5% to 20%. On the other hand, customer retention increases the profitability of the e-commerce business significantly. Returning customers are not only more likely to purchase again, but they are also more cost-effective. 

Additionally, customers who stay loyal to the brand are 83% more likely to recommend your products to their networks. WOM and feedback can support conversions, increasing purchase probability by 270% for online reviews and retention rate by 37%.

Rashi Kundra

Rashi Kundra

Rashi is a literature graduate from Delhi University. She is a content writer at Wigzo. In her spare time, you will find her meditating while grooving on EDM beats.

Related Blogs