It is pretty common knowledge that it is cheaper to get returning customers to make another purchase than it is to acquire new customers. This is as true for dropshippers as it is in the brick-and-mortar space, and perhaps even more so. No matter what you are selling and what channels you are using to sell it, returning customers are the holy grail of your business.
So, the obvious question is, how does one go about getting returning customers or, in other words, increasing customer retention? In this article, we are going to focus on what exactly customer retention is, the best strategies for increasing customer retention and how you can quantify your success. Let’s do this!
What is customer retention?
Customer retention refers to your ability to get returning customers to make repeat purchases from your store. Every time a customer walks through the (digital) doors of your online store, you should be automatically looking for ways to get them to come back. Customer retention starts from your very first interaction with the customer and continues throughout your relationship with them.
Why is customer retention so important for dropshippers?
Ummm, have you seen the cost of ads lately? What do your acquisition costs look like at the moment? In the crowded e-commerce space, cost-per-click ads are getting more expensive and it is harder and harder to get the attention of first-time customers. One moment your ads are clipping along fine and bringing in sales, the next moment Google has paused your ad campaign because you are being outbid so badly that they can’t even run. So, it’s either increase your ad spending or don’t advertise at all. If you are super reliant on paid traffic, this is no bueno for your store.
That being said, once you have successfully attracted a customer to your store and they have completed their first purchase, you need to hang on to them like your business’s life depends on it. Because it does! That customer is now your most important asset and you need to treat them as such.
As we’ve already mentioned, getting returning customers to make repeat purchases is far easier and less expensive than acquiring new customers over and over again. And there are many super cost-effective (and even free!) methods you can implement to accomplish this. Amazing, right? Building a following of loyal customers who like and trust your brand definitely pays dividends in the long run.
Top 7 Strategies for Dropshippers to Get Returning Customers
There are many strategies you can implement to get your customers to progress from being first-time buyers to repeat customers, and we’ll be discussing our top picks here.
You’ll notice a couple of overall trends though: the first is to provide an excellent customer experience and, therefore, generate a happy customer. The second is, well, reminding them you exist. It sounds funny to say out loud, but it’s true! They can’t buy from you if they forget about you, right?
So, without further ado, let’s get into our top 7 strategies to get returning customers:
1. Excellent customer service
This is the lynchpin of every successful business. You will have approximately zero return customers if your customer service stinks, so it is imperative you provide your customers with a positive experience. The three most basic ways to ensure you are providing amazing service are to:
- Be easy to reach! Give them several ways to get in touch with you: online chat, email, contact forms and phone are all options you should have in place. But make sure you are actually monitoring all your channels and responding! Having contact methods but not responding when a customer reaches out for help is worse than having no way to contact you at all. Not a good look.
- Be friendly! Always strive to treat your customers with respect and make things as painless as possible for them. Leave them feeling better after speaking with you than they did before they reached out. Being nice is such a simple and easy way to improve customer loyalty, don’t you think?
Problem-solve like a BOSS! Resolve any issues that come up in a timely fashion. Be open and honest with your customer during the process and do your best to make it right, even if you can’t give the customer exactly what they want. Think outside of the box to come up with creative solutions!
2. Make it easy to do business with you
A smooth shopping experience is an excellent way to make sure you get the customer to buy in the first place and to earn you their repeat business. A key way to do this is to make your site as easy to use as possible. This is especially important if you are just starting up and still building awareness and trust with your target audience.
Ensure that when customers take a chance and come to your site they are rewarded with something that is both beautiful and functional. Make sure it is easy for them to find what they want and have their questions answered with just a few clicks. Make it well-organized and logical.
Be consistent in your branding and really make sure you are speaking to your target customer. Show them you understand their needs and have the solution they are looking for.
3. Quality suppliers and unique product offering
Working with trustworthy brands that carry quality products will be a major pillar for your success in dropshipping. And it is your best bet for ensuring a happy customer by supplying them with a product and experience that meets or exceeds their expectations! You will have fewer issues to deal with along with more straightforward policies should anything unexpected come up. This adds up to a happier customer that is more likely to buy from you again.
You can also look at your overall product offering for a great way to set yourself apart from the competition. Getting returning customers is much easier when you have a unique value proposition for them, such as product options they can’t find anywhere else. This could be different colors, finishes, sizes, materials and styles. Many competitors tend to carry the base models of a product but not a lot of the extra options available, so set yourself apart by giving your customer those choices they can’t find anywhere else.
4. Clear store policies
You want to be as clear as possible with your store policies so your customer fully understands the process and can have full confidence when buying from you. It also protects you, the retailer, in case of a dispute. Everybody wins!
Here are some examples of common store policies and questions your customers will have:
- Returns policy: How long do they have to request a return? What is the process? Are there restocking fees? Is shipping included?
- Shipping policy: How much will shipping cost? How long will it take? Will they receive a tracking number? How will the product be delivered? Do they need to set up a delivery time?
- Price Match Guarantee: Which competitors qualify for the price match offer? How long does the guarantee last? How will the customer receive the refund? Are there any other limitations to this policy?
Dropshippers have some unique considerations with their store policies since they will likely have numerous different shipping, return and pricing policies to contend with from their suppliers. Your best bet will be to either lay out a specific policy for each brand in your store or make a blanket policy that overall encompasses all brands.
Being clear with, and honoring, your store policies enables customers to feel more confident in their purchases from your store. And, guess what? When they feel more confident in purchasing from you, they are more likely to come back as a returning customer, too. BAM!
5. Reward loyalty
A great way to express your gratitude to your customers is to provide them with special offers available only to them. This is going to help you motivate and inspire your existing customers to continue to buy from you.
Customer loyalty programs can be implemented in a variety of ways and the really fun part is that you can get super creative with your programs. Test out different loyalty strategies and see what your customers respond to. When you find something that really hits and seems to progress them along the line from first-time buyers to repeat customers to loyal fans to brand ambassadors, that’s when you will know you’ve found the secret sauce!
Here are some examples of how you can move your customers along that loyalty progression line:
Get repeat customers:
Reward first-time buyers with special offers to motivate them to make their second purchase. This may be an expiring coupon, discount or free gift with their next purchase. Play around with different factors of your offer such as timelines, coupon/discount amounts, purchase amount requirements, etc. to find out what works best for converting your first-time buyers into returning customers.
Build a base of loyal fans:
Provide your true-blue fans, your most loyal customers, with better incentives than are available to your average customer. Perhaps you would segment this group by the number of purchases they’ve made with you or the total dollar amount they’ve spent. These are the people who are making you money and you, as a business owner, need to show them you appreciate and understand their value.
Turn your loyal fans into brand ambassadors:
ALWAYS provide referral incentives to turn your most loyal fans (and sometimes even first-time buyers!) into brand ambassadors. You could build out a whole affiliate program for this or offer special discounts/pricing on your products. Work with your top customers to find out what they are looking for and how you can best reward them. Remember, a referral is the ultimate in praise from your customer and it is the best marketing you could possibly have. So, make sure you reward referrals handsomely!
6. Ongoing communication
It is often said “the fortune is in the follow-up” and it is truly non-negotiable when your mission is to get returning customers. You need to get your brand in front of your customer repeatedly to stay top of mind and to get them back to your site.
Email marketing is the best way to accomplish this. You can build out tons of different automatic email flows to simplify your marketing, test different approaches and achieve different goals. Here are some simple ways to use automated email marketing flows to keep in touch with customers:
- Thank you emails once they place their order
- Order tracking/shipping updates
- Follow up once the order is received to ensure the customer is satisfied
- Request customer reviews
- Abandoned cart follow-ups
- Back-in-stock updates
- Holiday and birthday special offers
- Updates on new products
- Special offers on complimentary products
You can implement a few of these techniques right off the bat and continue adding email flows as you grow your email list. But, always remember, your customers have given you their contact information in good faith. It is your responsibility to provide them with value-added, timely information and ultimately just not be annoying. Don’t abuse their trust or you will find yourself quickly on the “Block” list. No returning customers for you!
7. Meet them where they are with the Dream 100
Another powerful strategy to bring in returning customers is to make valuable relationships and partnerships with other brands your target audience already likes and trusts. This is called the Dream 100 strategy. We wrote a full article about it here. Essentially, it involves building out a list of 100 affiliates, partners or places where you would like to be to capture the attention of your dream customer profile. This could be podcasts, influencers, blogs, newsletters, etc. Once you’ve made your list, your goal will be to connect with your target audience via these channels.
This is a long-tail approach and requires you to have a very well-defined brand that connects well with your target audience. But be authentic with your marketing and nurture these new partnership channels and the Dream 100 will be an excellent addition to your toolkit.
For a deep dive into the Dream 100 and how to leverage it to attract more first-time buyers and returning customers with organic traffic, you definitely want to check out the ECOM SEO FORMULA course. We took this course and cannot speak highly enough about it. Go check it out!
How to measure success
Once you’ve begun to implement your customer retention strategies, now it’s time to sit back and see what kinds of results you get. There are a lot of different metrics dropshippers can use to drill down and figure out how things are going, but we are going to keep it super simple and just discuss three key metrics.
Customer Lifetime Value (LTV)
Customer Lifetime Value or LTV is the total amount of money a customer spends with your business during the lifetime of the business relationship.
Customer Lifetime Value = Average purchase amount x Average purchase frequency
Customer Retention Rate
Customer Retention Rate refers to the ratio of customers that return to make another purchase from you. This is also called the repeat customer rate.
Customer Retention Rate = Number of repeat customers/Total number of customers
Conversion Rate refers to the percentage of customers who have completed a desired action in response to a targeted strategy or campaign. In this case, that desired action would be your customer making a repeat purchase in response to a customer retention strategy. You can perform this calculation for each strategy and also as an overall number encompassing all your different customer retention strategies put together.
Conversion Rate = Number of customers who completed the desired action/Total number of customers who were targeted by the strategy
Your goal is getting returning customers so, as you implement the strategies we discussed in this article, you want to see each of these metrics increase over time. This will mean that your customer retention strategies are working and that you are increasing the value of each customer. And that is fabulous news for you and your store!
The Bottom Line
In this article, we’ve highlighted some very simple and affordable best practices that dropshippers can implement to get returning customers at pretty much any stage of their business journey. With ad costs increasing over time, leveraging existing customer bases to drive sales is becoming ever more important.
Your current customers could be future loyal customers and brand ambassadors but it is up to you to get them from point A to point B.
Focus on cultivating customer loyalty through the strategies we discussed above and it will go a long way toward both getting returning customers and increasing the profitability of your store. And don’t forget to keep measuring your progress so you can continue to improve your strategies and keep increasing your effectiveness over time.
Need a little help?
Want to meet up for a Power Coffee Break to discuss different customer retention strategies and how to implement them? Click here to connect with us.
Make sure you check out our good friends over at Dropship Breakthru for a step-by-step guide to get your dropshipping store up and running in just 30 days. Their course includes detailed lessons specifically geared toward getting returning customers for your business!
And don’t forget to share your thoughts by leaving us a comment below! We’d love to hear what strategies you’ve found useful or answer any questions you may have.