Acquiring customers requires a lot of effort and investment. And retaining those customers can help recover those costs, as well as drive profits.
So, while you may be investing in customer acquisition, you must also put equal or more into customer retention. Because that’s where your Shopify store’s growth lies.
And thanks to AI, it can increase retention rates while you focus on other strategic matters for your store.
Curious to learn how AI can help you increase retention, growth, and profits?
Read this in-depth blog on strategies to use AI for customer retention for Shopify Plus stores.
Why retention matters more than ever for eCommerce
The eCommerce industry has been growing rapidly. With increasing competition, brands are trying to attract the same customers.
This leads to increased customer acquisition costs (CAC).
While the average CAC for eCommerce is $29, repeat customers generate 67% more revenue for eCommerce brands.
This makes customer retention and lifetime value (LTV) optimization critical for growth and business sustainability. When brands design strategies to retain customers, they generate more revenue and profits. Just a 5% increase in retention rates can significantly increase profits.
AI retention strategies for eCommerce can help automate the process and help brands have a pulse of customer preferences and trends.
What makes AI customer retention for Shopify Plus a must-have
Shopify Plus provides numerous technical capabilities required for effective AI-powered retention strategies. Let’s look at them:
1. Advanced APIs for data integration
Shopify Plus offers advanced APIs that enable easy data integration across customer touchpoints. This helps create customer profiles that can be used by AI models for accurate insights and personalization.
2. Ability to run personalized workflows
Shopify Flow enables personalized workflows at scale. When combined with automation capabilities of other tools, eCommerce brands can set up complex retention logic systems with ease. Moreover, customized apps can enhance functionalities.
3. Ecosystem of AI-powered integrations
AI models have the ability to access and bring together data from multiple sources within your Shopify Plus store ecosystem and provide consolidated insights. For instance, browsing history, customer engagement, various touchpoints, etc. With AI, you can manage complex Shopify Plus aspects as one.
Core components of an AI customer retention model for Shopify Plus
While there’s a lot you can do with AI, there are some basic must-have components to have a successful AI retention strategy for Shopify Plus. Here are the components.
1. Predictive analytics
One of the biggest advantages of AI is predictive analytics. It helps identify risks before they occur. AI can help with predictive churn prevention by analyzing customers’ behavior patterns. For instance, AI systems track purchase frequency changes, engagement rate drop, etc., to understand if customers are likely to leave your Shopify store.
AI has capabilities for advanced customer segmentation, which can help you understand how likely customers are to repurchase from your Shopify store. The ability to create dynamic customer groups based on likelihood to repurchase, communication channel preference, etc. helps with proactive retention.
2. Personalization engines
AI has the ability to track customer purchase history, browsing patterns, engagement behavior, among others that provides deep insights. This information is used to create personalized content, offers, and experiences for eCommerce customers.
For instance, AI systems can track real-time customer behavior, and create tailored product recommendations that appear on different pages throughout the customer journey, encouraging customers to make purchases.
3. Loyalty and rewards optimization
Increasing customer loyalty with AI helps drive retention. AI’s ability to offer dynamic rewards and points based on customer behavior can help increase retention probability. Instead of offering blanket discounts, AI uses intelligence to understand which customers are more likely to take desired actions. With AI, you can increase personalized offers compared to a one-size-fits-all approach.
4. Subscription and replenishment management
Ecommerce brands that sell products that need regular replenishment, can use AI for forecasting, automated reminders, automated messaging to customers, etc. to drive repeat sales.
AI can track optimal reorder timing, customer reorder patterns, purchase quantity, seasonal changes, etc. The AI systems can send automated reminders to help manage inventory, as well as to customers.
5. Customer support and experience
With AI’s instant responses to customer queries, you can ensure customers receive prompt replies, and fast solutions. For instance, if a customer has a complex query, the AI system routes the issue to the concerned human agent.
Moreover AI-powered chatbots also have the capability to re-engage customers, identify opportunities for repeat sales, etc. Apart from that, AI can identify customers experiencing problems before they contact your support team.
6. Post-purchase engagement
AI systems smartly figure out the optimal timing for sending post-purchase messages. For instance, for collecting product reviews, feedback, for sending educational content for products, etc. AI personalizes messages based on customer segments. Post-purchase engagement is also an opportunity for repeat sales, cross-selling, offering incentives for future purchases, etc.
7 AI-powered retention workflows for Shopify Plus brands
Incorporate these 7 AI workflows in your Shopify Plus store at various customer touchpoints to increase retention rates.
1. Churn prediction and win-back automations
AI systems can track customer behavior and identify customers who are likely to leave. To increase the potential of them not leaving, AI models offer personalized offers and incentives along with the right message at the right time. Shopify Plus stores can reduce churn rate by automating churn prediction.
2. Smart replenishment reminders
Shopify Plus stores that offer products that need regular replenishment can benefit from setting up AI-powered replenishment reminders. AI-based predictive churn prevention systems track customer behavior, reorder patterns, timings, etc., to trigger replenishment reminders. AI systems also combine this with personalized product recommendation as well as convenient reorder options to increase the probability of sales.
3. AI-personalized loyalty program nudges
Loyalty members tend to provide the highest lifetime value as they stick with your brand for longer. They are your VIP customers and hence should be given exclusive treatment. Elements such as dynamic messaging to inform individual customers how the loyalty program could benefit them is another way you can enhance customer loyalty with AI systems.
4. Dynamic VIP tiering
Automated AI models can adjust loyalty tiers based on customers’ predicted lifetime value instead of historical data. This ensures your high potential customers receive VIP treatment and exclusive experiences.
5. Customer service automation tied to LTV
AI systems can be used to automate customer support based on individual customers’ LTV. For instance, the system can prioritize and personalize responses based on individual CLTV and churn risk scores. This can help increase AI customer retention for Shopify Plus and reduce churn.
6. AI-powered cross-sell in post-purchase emails
Cross-selling is an effective retention strategy. AI-powered systems have the ability to show product recommendations in order confirmation pages, shipping notifications, etc. These cross-sell messages are optimized based on individual purchase patterns and compatibility analysis.
7. Sentiment analysis for proactive retention offers
AI models analyze customer sentiment based on their reviews, comments, and interaction with the brand to identify any issues that might trigger them to leave the brand. Based on sentiment analysis, AI systems take proactive actions to retain customers and automate business growth.
Tools and platforms for AI-driven retention for Shopify Plus
There are many AI tools in the market, but we’ve listed a few here from our experience working with Shopify Plus brands for increasing customer retention using AI.
1. Klaviyo for AI workflows
Klaviyo helps create personalized marketing workflows. The platform offers automation on various channels, such as email and SMS, machine learning to determine optimal sending times, analyzing engagement patterns, etc.
The platform’s predictive analytics capabilities identify customers likely to take specific actions, such as make purchases or leave the site. The platform provides dynamic product recommendations in real-time. For Shopify Plus brands, the platform can ensure seamless and effective utilization of customer data.
2. Gorgias for AI ticket triage
Gorgias provides AI-powered customer support capabilities. For instance, with sentiment analysis, it identifies customers that are likely to leave and prioritizes them. The platform also identifies support requests and routes them to specialists with relevant expertise to speed up resolution time.
For subscription businesses, the tool can automatically adjust delivery dates, pause deliveries, offer discounts, etc., to ensure AI-based customer retention for Shopify Plus.
3. Shopify Flow with AI integrations
Shopify Flow connects AI insights into automations. For instance, through Zapier, it can drive retention workflows in external AI platforms. LangChain integration helps with custom AI workflows to create personalized experiences across touchpoints.
Moreover, Flow sends customer data to ML models to generate predictions that can trigger automated retention workflows and actions.
How to choose the right Shopify Plus AI agency
Hiring a Shopify Plus AI agency for the long-term can be like the backbone of your business. Look for these capabilities when choosing a Shopify Plus AI agency for your brand.
1. Experience in relevant industry
Every industry has specific requirements when it comes to marketing. And hence, your Shopify Plus AI agency should have relevant experience. For instance, in the health and supplements industry, knowledge about regulations is critical. Hence, understand how much experience the agency has in the industry.
To know this, ask potential agencies to share examples of past work, case studies, ask them specific questions about regulatory frameworks followed in your industry, give them a hypothetical problem to work on, etc.
2. Ability to implement end-to-end workflows
It is one thing to be able to install an AI tool, but it is completely another thing to be able to use the tool and integrate it efficiently into your system. Many agencies might know which AI platforms and tools are available, what they’re used for etc., but do they know how those tools can specifically help your business?
To find that out, ask the potential Shopify AI agency to explain how the tool will help your store, what are the projected results, and how they will help you meet your business goals. Ask the agency to map your customer journey, identify touchpoints where AI will add value, etc.
3. Proven results
If your goal is to increase customer retention and reduce churn, request potential AI agencies to show proven results of LTV growth, reduced churn rates, and higher repeat purchase rates. Ask for proven results within your industry and relevant to your retention goals. This will help you gain a deeper understanding of their capability and confidence in making hiring decisions.
4. Transparency in reporting and strategy
One of the most critical factors when hiring a Shopify Plus AI agency is transparency. The agency should be transparent about their capabilities as well as limitations. The agency should follow a system for regular reporting and progress tracking, for example, monthly, quarterly, etc.
AI systems can be complex and hence, the agency should have the ability to share with clarity, progress reports, future plans, gaps, and solutions, etc. The agency should have the ability to set up competitive strategies based on your business goals.
Mistakes to avoid when implementing AI retention
Integrating AI can be a significant investment. Besides, it can get complex, and hence, it is important to do it carefully and strategically. Here are some mistakes to avoid.
1. Automation without human oversight
If Shopify Plus automation for retention is not implemented properly, it can adversely impact customer experience. It can also lead to missed opportunities. For instance, if a customer interacts with an AI chatbot regarding an issue and the AI model is not able to address it nor is it able to hand over the matter to a human agent, it can lead to customer dissatisfaction and churn. Hence, it is critical for AI and human intelligence to work in collaboration.
2. Ignoring compliance in messaging
Compliance is an important factor in the eCommerce industry, more so, in certain industries. For instance, the health and wellness industry requires following strict compliance and regular updates as rules and regulations keep changing. AI systems should be implemented in a way that they follow guidelines. Choose a Shopify AI agency that has deep compliance knowledge and experience.
3. Using one-size-fits-all personalization
AI and one-size-fits-all do not go well together. In fact, they are opposites. AI systems are useful for understanding individual customer preferences and providing personalized and relevant experiences to drive engagement, sales, and retention. AI models help with applying targeted rather than broad strategies.
4. Not aligning AI workflows with business goals
It is essential to align AI workflows with specific business goals. Without that, your AI investment could go to waste and remain unlocked. AI should drive revenue and profit as well as optimize workflows throughout customer touchpoints.
Get started with AI customer retention for your Shopify Plus store
Customer retention with AI can multiply your Shopify Plus ROI. From automation to predictive churn prevention to enhancing customer experience with AI-driven customer lifecycle, AI capabilities can ensure you’re able to stay relevant in today’s fast-paced eCommerce environment.
Whether you’re facing challenges with customer retention or want to incorporate AI to increase retention rates, XgenTech can help.
