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Understanding Returning Customers (AKA Repeat Customers)
What’s better than a new customer? A repeat customer who continually repurchases from your store.
At Tydo, we tend to look at returning customers through the lens of cohorts. In this instance, we define returning customers as the number of customers from a selected cohort who have repurchased from your store in a chosen subsequent month.
These people are fans of your brand. They’re the loyal customers who continue to drive growth, revenue, and brand awareness for your ecommerce store. While new customer acquisition is important, emphasizing retention (thanks in part to customer satisfaction) is more cost-effective over the long term.
Why are these customers important?
Existing customers—or returning customers—become superfans of the brand and keep acquisition costs down (it’s cheaper to keep a customer than to acquire new ones repeatedly!). Plus, they help you better understand customer behavior.
How to calculate Returning Customers
Returning customers =the number of customers who repurchase from your store in a selected month
Data source: Shopify
Example
Let’s say you run an online athletic apparel store. In January, Julie bought a pair of joggers and a sports bra as her first purchase. In January, Julie is considered a new/first-time customer.
Julie returns to your online store in June to buy running shorts, a t-shirt, and a tank top. Now, that makes Julie a returning customer as this is her second time purchasing from your store. From now on, she is considered a returning customer.
Takeaway
Returning customers is like opening a savings account at your existing bank. You’re already a bank customer with a checking account, but now you’re a repeat customer after opening a second account a year later.
While brands need to have strategies to acquire new customers, it’s equally important to prioritize retention and focus on customer loyalty.
It’s more cost-effective to focus your marketing efforts on retention. Plus, there’s a sense of value and loyalty that comes from repeat purchases, which will fuel growth in the long run.
Focus on driving that second purchase by providing exceptional products and experiences. Nik Sharma of Sharma brands illustrates this: “Happy customers bring you, new customers.”
Ready to level up your learning?
Read more about Returning Customers
How to leverage cohort data to learn more about Returning Customers
Run a cohort analysis to dive deeper into purchasing behaviors
Cohort data is incredibly valuable. Leveraging cohorts can be a superpower!
Eli Weiss, senior director of customer experience and retention at Jones Road Beauty, recommends brands “dig into customer cohorts and hand-hold customers through their journey.”
Using cohorts and the metrics associated with returning customers, you can answer essential questions:
- What takes place during a customer’s buying journey? Do they come back or not?
- Is there a cohort that’s buying more frequently? What’s prompting this?
- Are certain new products performing better or going stagnant with customers?
- Is there a specific cohort experiencing a frequent high churn rate? How might this be reduced?
- What retention strategies can you implement to boost your current customers' LTV (customer lifetime value) while still acquiring first-time buyers?
By tracking this data, you can leverage it to customize email marketing campaigns (segmentation) and better serve subsets of your customers. In your marketing, remind them why they came to your brand in the first place.
What are the best channels to retain customers in ecommerce?
Start with email and SMS marketing
Regarding retention strategies, focus your efforts on the entire marketing funnel and make each channel work for you.
Email and SMS are two key channels brands use to strengthen their relationship with returning customers and encourage repeat business.
Not sure how to differentiate messaging for the two platforms? Klaviyo breaks down a few key differences and ways to level up your efforts. One top tip: Keep your texts short, sweet, and to the point.
Set up a post-purchase flow in the email
A post-purchase flow is a great way to communicate with your customers and build a strong customer experience. Learn post-purchase email tips and tricks from expert Monica Grohne. One top tip: Make your customers feel valued by asking them for feedback after they receive their purchase. Intentional segmentation will create a strong customer experience and keep your customers coming back for more.
Connect with customers on a personal level with SMS
We’re all glued to our phones these days. Collecting phone numbers on your website is an easy way to meet customers where they’re at.
Former growth marketing associate at Three Ships, Lillie Sun prefers to send playful but relevant messages to customers, even if they’re not all product-related messages.
Another benefit of SMS? It allows brands to build transparency and develop a more intimate relationship with a segmented group of customers.
Want to know how SMS comes to life? Erica Aarons, retention and engagement manager at Rumpl, explains a post-holiday SMS tip: “It’s easy to follow up after the holidays and ask if they bought for themselves or as a gift, send post-purchase education, and even give opportunities to share UGC.”
Start a loyalty program
Customer loyalty programs are a great way to incentivize customers to continue purchasing or take a desired action.
Look to brands like Sephora and Blume. These are two examples of brands connecting with customers and offering perks for continued purchasing.
Build a community around your brand
Kristen LaFrance, the merchant engagement strategist at Recharge, explains that community building looks different for every brand. First, figure out how your small business defines it. You can start by asking questions such as:
- What does community mean to our brand?
- Why do we want to build a community?
- What’s the ideal community look like, and how will we measure success?
- What resources do we have that can accomplish community building and management?
- How can we improve customer engagement and offer high levels of customer support?
A community can be created on a wide range of platforms. Go where it makes sense for your customers – Twitter circles, Facebook Groups, or apps like Geneva.
Leverage paid channels
Chances are you already have paid channels running to acquire new customers.
The same methods can be used to retain them. Make sure to change copy and creative to keep paid ads relevant. Look for ways to promote other products, incentives, or experiences, such as a loyalty program.
