14 jun 2023
Kelli is the senior content strategist for Order Protection.
Most eCommerce businesses understand the importance of providing a great customer experience.
But where some fall short is in the post-purchase part of the journey. We spend so much time, effort, and resources on acquiring new customers, that it can be easy to drop the ball once a customer makes a purchase.
Delighting and supporting your customers shouldn’t end at the sale—in fact, some of the most critical interactions happen post-purchase. Not only that, but existing customers can actually increase profits faster and at a greater scale than new customers.
In this article, we’ll explore what customer retention is, why it’s important, and how to optimize your brand’s post-purchase customer journey to boost retention. Specifically, we’ll look at seven shipping best practices that you can implement today to significantly impact your brand’s ability to retain loyal, happy customers.
Understanding customer retention and its significance
What is customer retention?
Customer retention refers to the ability of a business to retain its existing customers over a specific period. It is closely tied to customer loyalty, which is built through positive experiences and satisfaction with a brand.
Why is customer retention important?
Customer retention should be a crucial part of your eCommerce brand’s strategy for two main reasons.
First, you can’t truly grow your business if you’re consistently losing existing customers, even if you’re still acquiring new ones. You can back this up with simple math. By calculating your customer lifetime value (CLV)—how much value your existing customers are worth—and comparing it to your customer acquisition cost (CAC)—how much it costs to bring in new customers—you can see just how long it takes to recoup a lost customer’s value.
Which leads us to the second main reason: acquiring new customers will always cost more than retaining the ones you already have. Up to five times more, in fact.
None of this is to say you should view this as customer retention vs. customer acquisition. Both are incredibly important for growth—you just need to strike the right balance between the two rather than getting so caught up in winning new customers that you forget the value of those who are already buying from you.
Because not only is it less costly than customer acquisition, retention can also help increase profits. Research from the Harvard Business Review shows that increasing customer retention rates by just 5% can lead to a profit increase of 25-95% in businesses across various industries.
Plus, studies show that existing customers are 50% more likely to try new products and spend 31% more than new customers. But this shouldn’t be rocket science—it makes sense that a customer who has already tried and loved your products or services most likely trusts and believes in your brand. So when you release new products or they return to shop again, they’ll be more likely to try new things and add to what they typically buy from your store.
Let’s get to the meat of the article: shipping. A necessary part of eCommerce, shipping is also an area of great opportunity for your brand’s customer retention efforts.
Improve customer retention with 7 shipping best practices that enhance the customer experience
Shipping plays a pivotal role in ensuring customer satisfaction and fostering loyalty. So much so, that research shows that 63% of consumers say poor delivery service would stop them from purchasing from a company again. Thinking back to the CLV vs. CAC equation from earlier, how long would it take you to recoup the value of 63% of your customers if they all left due to a poor shipping or delivery experience?
Not only is it crucial to get the post-purchase experience and the shipping part of the customer journey right, but it can also be incredibly simple with the right solutions and processes in place.
Let’s take a look at seven ways you can optimize your shipping experience to keep your customers happy and coming back for more.
Streamline order processing and fulfillment: According to data from Forbes, a streamlined order processing system can reduce fulfillment time by up to 30%, ensuring faster delivery and increased customer satisfaction.
Offer multiple shipping options and transparent pricing: Recent data from MetaPack shows that 66% of consumers consider a choice of delivery options as a decisive factor in their purchase decisions. Transparent pricing builds trust and helps customers make informed choices.
Ensure accurate tracking and timely updates: 93% of customers expect real-time tracking updates throughout the shipping process. Providing accurate tracking information and proactive updates keeps customers informed and engaged, and can reduce the number of WISMO requests to your customer service teams.
Package products with care, attention to detail, and sustainable materials: Quality packaging that protects products during transit not only reduces the likelihood of damage but also enhances the unboxing experience. And, changing consumer preferences are placing greater importance on sustainability and recyclable materials. If your brand can implement eco-friendly shipping practices, you’re bound to win retention points here as well, since more than a third of global consumers are willing to pay more for sustainability.
Utilize branded packaging for a memorable unboxing experience: Branded packaging can leave a lasting impression on customers. In fact, 40% of consumers are more likely to share their purchase on social media if it comes in branded or gift-like packaging.
Personalize shipping communications and notifications: Personalization goes a long way in making customers feel valued. Personalized shipping notifications and communications, such as thank-you notes or special offers, can foster a sense of connection and loyalty.
Offer shipping protection or insurance to protect customers' orders: Shipping protection or shipping insurance offers customers peace of mind by safeguarding their orders against theft, damage, loss, and other unforeseen circumstances. Research indicates that 78% of customers would be more inclined to spend more online if offered protection or warranties at checkout, and 60.1% would purchase insurance, protection, or warranties from eCommerce brands if given the option at checkout.
The role of shipping protection in customer retention
The most effective shipping best practice to implement when it comes to customer retention is providing robust shipping protection.
Shipping protection, also known as shipping insurance, offers an additional layer of security to customers. By offering shipping protection, you show customers that you value the shipping experience they have after making a purchase through your store, and care about their continued relationship with your brand.
Look at it this way: 92% of shoppers say they would quit buying from a company after just one bad experience with customer service. If you don’t have processes in place to resolve shipping issues—like offering shipping protection—customers who are already upset about a poor shipping experience will only become more agitated when their problems aren’t solved efficiently or effectively. Turning a shipping problem into an opportunity to provide excellent customer support is a quick way to earn that customer’s loyalty with your brand.
Implementing shipping protection in your eCommerce store
Deciding to offer shipping protection in your eCommerce store is just the first piece of the puzzle. Find a provider that will be the best fit for your brand—this service should be an extension of your brand, ensuring your customers have a seamless experience throughout the entire shopping process.
Transparency here is key as well. Be clear about what’s covered and how the shipping protection option works so your customers don’t lose trust along the way.
As you implement this new offering, consider the following:
Explore different shipping protection options and their features: Research various shipping protection providers to find the best fit for your business and ensure comprehensive coverage.
Integrate shipping protection seamlessly into the checkout process: Simplify the process for customers to add shipping protection to their orders during checkout. Most providers will allow you to add a simple toggle to your cart, or a one-click option at checkout. An intuitive and user-friendly interface encourages more customers to opt for protection.
Provide step-by-step guidance on enabling shipping protection for customers: Offer clear instructions or FAQs on how customers can opt for shipping protection, including any terms and conditions. Transparency is crucial for building trust.
Highlight any additional considerations or requirements for implementing shipping protection: Communicate any relevant information to customers, such as limitations, claim processes, and customer support channels. Clear communication helps manage expectations and ensure a positive experience.
Measuring and optimizing customer retention
Like any strategy, the practices you implement to boost customer retention won’t be a “set it and forget it” situation. Regularly measuring customer retention metrics and analyzing the data will be key in identifying what’s working, what’s not, and where you can make improvements.
To measure customer retention and optimize your strategies, start by following these steps:
Measure customer retention and loyalty metrics: Utilize key performance indicators (KPIs) such as customer churn rate, repeat purchase rate, and Net Promoter Score (NPS) to assess the effectiveness of your retention efforts.
Analyze data and identify areas for improvement: Dive into customer feedback, reviews, and shipping-related data to pinpoint areas where enhancements can be made. Pay attention to any patterns or trends that emerge.
Continuously optimize your customer retention strategies: Implement data-driven improvements, test different approaches, and iterate your shipping processes to ensure ongoing growth and customer satisfaction.
Build lasting relationships with shipping protection
Data shows that almost half of all sales (41%) are generated by satisfied, repeat customers. So it should go without saying that customer retention should be a major part of your brand’s strategy.
The best way to increase retention is by providing a customer experience that is personalized and focused on creating lasting relationships between your brand and the people who shop with you. One way to do this is through your post-purchase processes, including shipping. By implementing the shipping best practices in this article, you can build customer loyalty, foster positive brand associations, and ultimately drive sustainable business growth.
Reach out today to learn how partnering with Order Protection to offer shipping protection to your customers can have a lasting impact on your customer retention rates and can help propel your eCommerce brand forward.