Why Retention Marketing Pays for E-Commerce Store Owners

As a small business owner, 80% of your future profits may come from just 20% of your existing customers.

Let’s think about that for a moment. Nearly all of your income will come from people that have already purchased items from your e-commerce store.

If you’re spending hundreds or thousands of dollars each month on PPC ads, sponsored social media posts, and other customer acquisition tactics, you may be doing your business a disservice. Retention marketing isn’t just more affordable than customer acquisition marketing, it’s more effective, helping you sell more products per month without over inflating your marketing budget.

Learn more about the differences between customer retention vs. custom acquisition and why you should be more focused on the latter.

Why Retention Marketing Works:

Consider all the time and money that goes into convincing a new customer to take a chance on your business. You have to introduce this person to your brand and products and why they should buy them, as opposed to reconnecting with someone that’s already purchased something from your website.

Here are just some of the reasons why you should focus on customer retention:

  • Retention Marketing Costs Less than Customer Acquisition

It costs 5% more to acquire a new customer than it does to keep a current one.

Why? Even if you’re targeting individuals most likely to purchase your products, the chances of these shoppers taking a chance on your brand after the first impression are slim. First-time customers typically need several interactions with a brand before they’re willing to enter their payment information, which only adds to your marketing expenses.

  • Returning Customers Already Understand the Value of Your Products

When reaching out to existing customers, you don’t have to waste time introducing your brand or products. These customers already have an opinion of your products, so all you need to do is send them a reminder instead of building a relationship from scratch.

  • Repeat Customers Are More Likely to Buy Your Products

Targeting existing customers increases the chances that each ad impression will lead to a sale. Everyone who sees your ads will be more likely to make a purchase as opposed to people who have never heard of your brand.

The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is 5-20%.

How to Improve Retention Marketing

Use these retention marketing tips to keep your existing customers coming back for more:

  • Figure Out Why Your Customers Stop Buying

Once you figure out why your customers stop buying your products, you can start creating a work-around. Use customer surveys to learn more about your customers’ buying habits. If your customers only need to buy your products occasionally, consider diversifying your inventory. If the price of your products is discouraging repeat sales, consider lowering the price or offering cheaper alternatives.

  • Focus on Customer Service

66% of consumers who switch brands do so because of poor customer service.

Improving your customer service can help you increase your retention rates, even if your competitors offer a lower price. Customers are willing to pay more for great customer service, so make sure you respond to customer inquiries in a timely manner and deal fairly with your customers.

  • What Attracted Customers to Your Brand in the First Place

Figuring out what attracted existing customers to your brand can help you deepen this relationship. Use different marketing messages and compare the results to find out what’s pulling customers into your online store. It may be an emotional connection to your brand, the intrinsic value of your products, great customer service, or a lower price point.

Use this information to encourage your customers to make repeat purchases.

  • Differentiate Returning Customers from New Ones

Use a data analytics program to find out what portion of your customers are making repeat purchases. This will give you a better understanding of your income and how often your customers are coming back to make additional purchases. If your retention rates are low, you need to focus more on retention marketing. But if almost all your customers have visited your website before, you’re likely better off focusing on customer acquisition.

  • Target Existing Customers

Once you’ve differentiated your existing customers from new ones, you can start targeting repeat customers with email newsletters, sponsored social media posts, paid and organic search.

You don’t have to waste precious time explaining the benefits of your brand and products. Instead, use your marketing efforts to mention new products your customers may be interested in, follow up with individuals that have abandoned their shopping carts, and consider offering discounts and coupons to loyal customers.


When it comes to e-commerce, retention marketing pays. It’s the most cost-effective way to boost your revenue without dramatically inflating your marketing budget. You can also learn more about how customers view your brand and what convinces them to make a purchase.

Your online store will only go so far if you’re only focused on acquiring new customers. Use retention marketing to increase your bottom line, so you don’t have to spend as much money on marketing.

For more e-commerce tips, sign up for a digital marketing convention to learn about the latest retention marketing strategies.