Fostering loyalty and encouraging repeat purchases is what drives long-term profitability. This is where Retention Benchmarks come in.
There’s no denying that customer acquisition is critical to the success of any ecommerce business. No matter your niche, you need a solid customer retention strategy to ensure the sustainability of your entrepreneurial endeavor.
Thanks to advancements in ecommerce software, retention metrics are now easy to track and manage. Segmentation and advanced reporting features enable you to easily access data on repeat customers and even VIPs.
However, knowing your numbers is one thing—determining if they’re any good is another.
Retention benchmarks are industry standards that you can use to compare your company’s performance. Although you might very well be happy with your own results, your business doesn’t exist in a bubble.
Part of surviving in ecommerce is outperforming your competition. Benchmarks will help you determine whether you’re actually performing well in relation to others in your industry.
What is an Excellent Customer Retention Rate?
The definition of customer retention is the same in ecommerce as it is in physical retail sales. It is the ability of a business to maintain relationships with their current customers and, consequently, encourage repeat purchases.
The number of customers who return versus your total number of customers is your retention rate. But what rate should you target?
A 100% ecommerce retention rate is the most ideal you could aspire for. That means every single person who buys from your store comes back to buy again.
Realistically, though, not all buyers will be repeat customers. This is true no matter the nature or quality of your products and no matter how clever your retention marketing strategy is.
Even Apple—a brand that’s generally known to have near-fanatical loyalists—can only expect to retain 90% of their iPhone users. Still, that’s an exceptional outcome that any business would be happy to have.
On the other end of the spectrum, a low ecommerce retention rate of, say, 15% is good enough when your business is new and still gaining traction. As you generate consistent sales, you should continually aspire for higher numbers.
When your ecommerce store is already well established (i.e. completing at least 10 sales transactions per day), you should aim for a rate upwards of 30%.
Of course, retention benchmarks vary greatly per industry, especially as the nature of some products is understandably more acquisition-based.
For example, the marketing strategy of high-value items like home furniture and large electronics should be heavily focused on customer acquisition simply because purchase frequency is expected to be low in the first place.
In contrast, ecommerce retention should be more important when selling high purchase frequency products like skincare or pet food. That’s why it’s important to compare your performance to industry standards and other businesses within your niche—not with ecommerce statistics in general.
How Does Omnisend’s Retention Benchmarks Feature Work?
Omnisend’s built-in benchmarks feature enables you to compare your store’s performance to the ecommerce metrics of similar merchants in your industry.
In a single view, you’ll see your own returning customer rate, your industry’s average, and your store’s potential for improvement.
The benchmarks feature works alongside the information that’s automatically available to you in Omnisend’s retention report. Apart from your returning customer rate, this includes:
- Your total and average revenues from repeat customers
- How these numbers compare with the previous period
- Insights about your store’s recent performance
By combining all this information, you’ll be able to improve your retention marketing strategy. This strategy will be based not only on historical data but also on how you stack up against your competitors.
How to Use Benchmarks for Your Ecommerce Retention Strategy
Although easy access to your niche’s current and accurate benchmarks is undeniably useful, its real value is in how you use it to inform your marketing strategy.
This feature should give you a clear picture of where you are in your vertical and act on it with data-driven confidence.
If you’re retaining customers at a much lower rate than your industry benchmark, you need to work harder at fostering customer loyalty.
Put Omnisend’s advanced segmentation to good use and identify the VIPs and repeat customers to nurture. More importantly, you should identify inactive segments and develop a retention marketing strategy to keep them engaged.
Continuously track your returning customer rate in relation to benchmarks. This will keep them at the same level or, even better, ahead of other merchants in your industry.
Despite the value of retention benchmarks, it is important to realize that these numbers aren’t something you must absolutely achieve or surpass in order to be deemed successful. It is merely the average performance of ecommerce stores in your niche.
Falling below the benchmark doesn’t necessarily mean you’re failing or that you’re less profitable than your competitors. Always consider the unique realities of your business and use benchmarks as guidelines, not as goals set in stone.
Optimizing your ecommerce retention strategy for maximum customer lifetime value is vital. It is arguably the most crucial way to achieve growth and sustain revenue for the long term. This is true, no matter your niche.
Continuous improvement based on past performance is important. However, comparing your own retention metrics with industry averages is more so. This is because it enables you to see how you stack up against your competitors.
Retention benchmarks will help you stay competitive with businesses similar to yours.
Use them along with segmentation features and automated workflows to efficiently reach customers. Do so with personalized messages that foster loyalty and encourage repeat purchases.
The key to pulling this off? By using Omnisend. Try Omnisend free for 14 days!