7 Key Metrics for Retaining Customers for e-Commerce Businesses

What is it that every business needs at each step of its existence? If you guessed the answer as ‘customers’, you would only be partially correct! Then what does a business actually need to stay in the field for a long time? The answer again is customers but not simply customers, but the ‘customers who return for new purchases.’

This is what ‘customer retention’ exactly means. Customer retention is one of the most essential factors for any business, be it a grocery store in the local neighborhood or a multi-storied supermarket in a happening locality or an e-store that is just a click away.

What Is Customer Retention?

Retention of customers is nothing but making the old customers come again and again to the same store. That is, the business owners have to keep their existing customers from deviating to other stores. This may be done by maintaining quality, giving offers, offering special discounts for multiple purchases, and so on. Customer retention is as important to businesses as it is to attract new customers (if not more!).

So how can a business retain their customers and enhance their customer retention rate? We will tell you.

Important Metrics Every E-Commerce Business Owner Must Keep Their Eyes On

Here are seven key steps or metrics that all e-commerce owners must keep their eyes on to retain their customers:

AOV – Average Order Value

Average Order Value is the division of your total revenue by total orders. To be more precise, you should increase your number of orders to increase your total revenue.

That is if a customer comes to your site, you should make them buy, buy more than what they came originally for. This can be done by researching customer needs thoroughly.

E.g.: If they buy a new pair of shoes, you can upsell socks to them. Similarly, if they buy a book, you can also offer them lucrative offers on pens.

Have you ever observed how in retail supermarkets, chewing gums and chocolates are placed at the aisles near billing counters to attract the customer to buy those products? Who does not want to grab a bar of chocolate while waiting in a queue?

If there are kids with you in the queue, the better is the chance that the shop is going to get a new chocolate purchase, which was not preplanned.

CLV – Customer Lifetime Value

Customer Lifetime Value. It is the approximation of the number of purchases made by an average customer in their lifetime. This figure can be obtained by multiplying the AOV with the number of purchases made by a customer.

E.g.: if a customer prefers a particular brand of jeans several times, then it must be ensures that they come back for the same type of jeans the next time to your ecommerce store.

NPS – Net Promoter Score

Net Promoter Score. This score helps you understand the number of customers who would promote your services.

For instance, you can conduct a survey on customers and ask them questions like “would you let us know how much you are willing to recommend our brand/store to your friends on the scale of 1 to 10?” The customers who give the maximum score are the ones who are likely to stay most loyal to your company. You could even prompt them to suggest a particular brand/website to a friend. Isn’t it free publicity? What’s more? It is the most effective form of publicity, ‘mouth publicity’.

NRR – Net Renewal Rate

Net Renewal Rate. It measures the customers who return to an e-commerce site once they have left for other company purchases. It is hence called the renewal rate. The higher the renewal rate, the faster the company is said to be getting its customers back.

Rate of Return Visitor

The rate at which a customer returns to buy a new product from a website is called the rate of return visits. It can be calculated by Google Analytics tool. This figure tell us about the number of customers that are regular to a website.

This factor helps a great deal to measure the loyalty rate for a particular vendor website. The higher the rate, the more revenue it will generate in the form of new purchases from existing customers.

Frequency of Purchase

The frequency of purchase can be calculated by dividing the number of orders of a customer by the total number of customers. Undoubtedly, the more is the frequency of purchase, the better will be your revenue.

You can increase the frequency of purchase by sending e-mails to customers and convincing them this is the best time to refill their order of a particular item.

E.g.: let’s say a customer buys a pack of diapers for their baby per month. After observing for a couple of months, you could send a reminder to them saying that it is time for them to reorder the diaper pack. It is more likely that customers will buy from the store that prompts them and offer personalized support.

RPV – Revenue per Visitor

Revenue per Visitor. This is a combination of AOV and Conversion Rate. This metric gives an overall picture of how many sales are being made and how many customers are returning to the same e-commerce site to make a purchase. It says how much revenue is generated per visit of a particular customer. The higher the revenue generated by a customer, the more valuable that customer gets to the e-commerce website.

E.g.: A customer who purchases larger products multiple times is more important for the company to retain.

The Wrap Up

Every business needs these statistics to calculate their strengths and weaknesses. Since e-commerce is the go-to thing today for all selling all sorts of items from jewelry to grocery, the business owners need to take initiatives to retain their existing customers for a longer time by maintaining the quality and the brand value.

The longer an e-commerce site can retain a customer, the longer it is going to survive the tremendous competition.