Tackle Increasing Customer Acquisition Costs Head-on With Customer Retention!

Multiple studies suggest that the rise in customer acquisition costs is “unsustainable”. Especially in the eCommerce industry, where it has gotten way easier for businesses to take their brand online. So irrespective of what you’re selling, how unique it is, or how great a deal you’re offering, a typical online shopper has at least ten brands to choose from. 

So what do you do?

Do you continually add more resources to your ad campaigns? 

Do you consider increasing your inventory beyond what you have to cater to diverse needs? 

Do you repeat the two above every time you see a dip in the number of sales your store sees? 

The answer is NO. 

There is a way out to tackle the increasing customer acquisition costs head-on. And it’s something that you’ve been putting on the back burner for months - customer retention. 

Wait, how does holding on to an existing customer help you combat increasing customer acquisition costs? 

Let us explain and let’s start from the beginning. 

What does customer retention mean for your Shopify store? 

Customer retention basically refers to your Shopify store’s ability to turn customers into repeat buyers. At the same time, preventing them from walking away to a competing store, forgetting about your brand, and forcing you to “acquire” them all over again. Customer retention is also often tied to brand loyalty. 

Pretty much similar to how you keep going back to Starbucks despite the number of options available to you for your daily cappuccino! 

Why is customer retention important for your Shopify store and how does it help reduce acquisition costs?

1. It’s easier to sell to existing customers 

First things first. If a consumer has bought from your brand before, they know the value you can offer to them. If they’ve had a good experience with the first purchase, you really don’t have to worry about convincing them all over again. 

In fact, a study states that the probability of selling to an existing customer is between 60 to 70 percent. On the other hand, converting a new consumer into a customer is just about five to 20 percent. 

When the convincing is easier, you don’t have to run multiple ad campaigns or marketing campaigns to nudge a purchase. That’s definitely a positive step towards reducing your customer acquisition costs. 

An old customer is still a customer when they make another purchase. 

2. It has proven to grow your profits 

Selling gets easier when consumers trust your brand. An existing customer has already shown that trust and with a little effort from you, making them feel valued, you can nudge them to buy higher-value products or more from you. 

Research by the Harvard Business Review found that companies that improve customer retention by a mere 5%, see an increase in their profits by 25 to 95%. More profits means more available resources to scale your marketing efforts. 

Now that’s definitely something you can use for your customer acquisition efforts. Right? 

3. It costs less to acquire returning customers who spend more 

On average, it costs five times more to acquire a new customer. If you have a customer that buys from you time and again, you wouldn’t have to continually worry about acquiring a new one. You can just re-acquire an existing one! 

What’s more? 

Inc. magazine also reported that returning customers tend to spend 67% more on average as compared to first-time buyers. 

4. It has proven to help stabilize your revenue 

When you work on customer retention, you know you’re building a base of loyal buyers for your brand. You know these are consumers that will keep coming back to you for more; contrary to those who haven’t heard about your brand and are simply exploring the options available to them. 

Loyal customers give your Shopify store a sense of security. When you rely solely on attracting new customers, you’re spending more and more to try and acquire profits that may fluctuate greatly. 

Fluctuating customer acquisition costs. Fluctuating profits. Or stable revenue by focusing a little on customer retention. What would you choose? 

5. It boosts the word of mouth and referrals that bring in new customers for less 

More than 80% of consumers trust recommendations that come from their friends and family. But your customers don’t naturally start talking about your brand or its products. You need to nudge them a little, but not too much either. 

The first step to this is customer retention. When you focus on customer retention, your existing buyers feel valued. The more valued they feel, the better their experience with your brand. 

The better their experience with your brand, the more likely they are to refer their friends and family to it. 

Now that brings down your customer acquisition costs drastically! And you reach the right consumers faster too.  

Convinced now? 

Now let’s get down to talking about how you can improve your customer retention so you can take charge of your customer acquisition costs. 

How can you improve customer retention on your Shopify store? 

1. Leverage machine learning and analytics 

Every consumer is different. Their needs are different and they choose to interact with brands differently too. 

The only way to improve your customer retention is to learn more about them. Now you can’t go asking them endless questions. But you can leverage technology to capture their data and learn from how they interact with your Shopify store. 

Yes, we’re talking about machine learning and analytics that can help you capture data, sift it and use it to create customer segments - a group of shoppers displaying similar purchase behavior and preferences. 

2. Set up a customer account page  

Another way to collect data from your store visitors is to simply make them feel like it’s a part of their shopping journey. Something that the likes of Amazon have been doing for years now! 

By enabling a customer account page on your Shopify store, you give online shoppers their very own space to save delivery addresses, wishlists, and more, and also keep track of their orders on one dashboard. 

It makes it easier for them to make purchases and easier for you to understand them and create personalized campaigns that bring them back for more! 

house of rare customer account page for customer retention

You can easily do this using a Shopify customer account page app like Flits

3. Create a loyalty program 

Give customers a reason to buy from your Shopify store time and again. Your offers are not enough to keep them motivated to engage with your brand. This is where a loyalty program comes in. 

A loyalty program essentially works on the logic of rewarding the consumer every time they make a purchase from your store. This could be in the form of store credits or coins that they can use in the next purchase they make. It keeps them going like an endless chain! 

loyalty program for customer retention shopify

You can build one out with an app like

4. Set up a referral program 

Loyalty is one aspect. But getting your loyal customers to refer friends and family to your Shopify store, you need to do more. 

A referral program works on the logic of encouraging customers to share their purchases with friends and family. Or simply invite them to your Shopify store to explore the products you sell. Of course, the only way to keep them motivated in this case too is to reward them for their efforts. 

But you can do this differently than how your loyalty program works. You can reward them only when a consumer they have referred to your brand makes a purchase!

5. Personalize your on-site and off-site communication 

The best thing about Amazon is how it tailors our shopping journey. Right from the home page to each of the product pages, it personalizes everything we see or are nudged to interact with. 

For instance, a good on-site strategy that can boost customer retention is to display dynamic product recommendations. This nudges the visitors to explore more products and also shows them how much you value their preferences. 

Similarly, a good off-site strategy is to send these personalized recommendations in your regular communication channels like email, Facebook Messenger, SMS, or even your retargeting campaigns! 

spently email marketing for shopify customer retention


For email communication, we recommend using Spently

6. Make customer service and experience a priority 

Today, most customers suffer from pre and post-purchase anxiety sometimes, they’re too afraid to make a purchase simply because a brand or a product is new to them. At other times, they’re worried if their orders would reach them on time without being damaged. 

This is where customer service comes into play. Ensure you’re easily available to your customers and they feel comfortable reaching out to you. At the same time, continually take their feedback to understand where you can improve their shopping experience. 

You can do this using an app like Gorgias

7. Offer them an enhanced customer experience 

Today, consumers are actively seeking in-store experiences online. While they can’t have a look and feel of products online, they do want the same experience. 

Take virtual try-ons for example. When you’re buying a pair of glasses online, you’d like to see how the frame looks on your face, and with virtual try-on technology, you could do exactly that! It’ll also help you make an informed purchase decision. 

There are several other technologies that Shopify stores should explore to offer their customers a superior shopping experience. We spoke about all of them in this article: Time to level up your Shopify store experience with technology

8. Introduce a subscription model 

Another smart way to get customers to buy from you, again and again, is to introduce a subscription model on your Shopify store. This is especially nifty for businesses that see products that are consumed on a regular basis. Let’s say grocery for instance! 

What makes this a hit with customers? Well, it makes it easy for them to get their regular buys. 

We spoke about the subscription model much in detail in our previous blog. You can read it here: What Is an eCommerce Subscription Model and Why Your Shopify Store Needs to Consider It This Year

subscription model shopify for customer retention


You can set one up using an app like ReCharge

Should you be worried about your customer acquisition costs? 

If you have been seeing your ad spends increase without as much an increase in the number of sales you’re making, the answer is YES. 

If you have started to become frantic about finding new channels to reach your customers, the answer is YES. 

If you are worried about not being able to sell out your inventory every month, the answer is YES. 

If you are seeing a lesser number of repeat customers coming back to your store every month, the answer is YES. 

If you really want to grow your Shopify store, despite the competition in the market, the answer is YES. 

Simply put, no matter what stage of business your Shopify store is at, you should be in control of your customer acquisition costs at all times. This is where it becomes important to focus on customer retention! 

Need help getting any one of the customer retention strategies in place for your Shopify store? Reach out to us

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