How to Improve Customer Retention with Digital Optimization

According to research by Bain & Company, as quoted in Forbes, “Increasing customer retention rates by 5% increases profits by 25% to 95%.” Further, existing customers are easier to convert, and acquisition efforts cost a lot more than nurturing the customers you have. So, while optimizing your digital channels it’s a good idea to focus some efforts specifically on retaining existing customers. In this blog, I’m walking through some ideas for specific A/B tests to try, focused at your returning customers.

Take Advantage of Product Recommendations

The brilliant thing about existing customers is that they have already given you information about what they want and the journey they take before converting. This means you have some understanding of where they encounter friction on your site, what products or services they already have, and in general how they interact with your messaging. This means that you can use product recommendations even more effectively. Part of that has to do with using a personalized algorithm, but there are other important factors to consider. Some ideas to try are:

• Update where you show product recommendations. For example, for a returning customer, you may try putting recommendations on the homepage.
• A/B Test the messaging around your product recommendations. Rather than generic messaging, try copy that helps customers imagine new items as part of a collection they started on their last visit.

Personalize Your Site Categories

Especially if you’re working with a large inventory, your homepage and navigation are huge opportunities for personalization. A lot of shoppers assume that a website navigation is a more or less static thing. And, a lot of websites stick to that premise. But there is no reason it needs to be. For example, say you’re a large department store with categories ranging from menswear, to furniture, to cosmetics. You likely have a pretty complicated nav structure with lots of categories and sub-categories. But, say you have a customer that bought lipstick last time they visited. When they return, you may choose to display cosmetics as a higher-level navigation item. These types of changes help customers find what they’re likely looking for and give them the feeling of being remembered. Some A/B tests to try include:

• Reorder your top navigation so relevant categories are visible to each customer.
• Feature personally relevant categories on your homepage.
• Highlight certain categories with messaging like, “Buy it Again”.
• Create a new navigation section with a title such as, “Selected For You”.

Improve Engagement, Not Just Conversions

When we think of conversion, we often think about our big, end goal conversion: purchase, booking, subscription, etc. But, for returning customers engagement can be just as important. Especially for returning users who have already completed a conversion, don’t neglect the other micro-conversions that build brand loyalty and lead to more activity down the line. For example:

• A/B Test ways for customers to save liked items, so they can browse and revisit them.
• Offer community or discussion spaces for customers to share ideas, reviews, and pictures of items.
• Surface special content for your most loyal customers, such as a preview of new products, articles from experts, or shots from an inspirational photo shoot.

Retention vs Acquisition

When you dedicate a percentage of your optimization efforts toward retention, you also create a draw for new customers. The more brand loyalty you can earn, the more alluring the drive to convert for new customers. Rather than thinking of optimization as solely about conversion, turn some attention toward retention and improving your overall digital experience.

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