According to a Harvard Business Review study, acquiring a new customer is five to 25 times more costly than retaining an existing one, underscoring the significance of customer retention to an e-commerce business’s bottom line. Even more substantial is the fact that existing customers are also more likely to spend more money, and they are easier to upsell and cross-sell to. According to industry estimations, increasing customer retention by five percent can lead to anywhere between 25% to 95% growth in profits.

Never before has nurturing your current customer community - through customer loyalty programmes and customer relationship management (CRM) systems - and ultimately maintaining customer retention been so important.

1. Loyal customers are a significant income source.

Loyal customers are worth more than just the initial purchase. They provide a stable income stream over an extended period, which may even span generations. A study by Bain & Company showed that loyal customers spend up to 67% more on average than new ones. 

They also refer new customers to the business, and according to Nielsen, referrals are the most effective type of advertising campaigns, with customers who frequent the business leading to over 16% in sales growth. For e-commerce businesses to ensure a loyal customer base, they must build trust by providing excellent customer service.

2. Personalized customer experiences lead to higher retention rates.

Personalization has been a buzzword in e-commerce for a few years now, and for good reason. Consumers today expect a personalized shopping experience, which can only be achieved through robust CRM. The majority of online retailers collect customer data, but not all of them use it to create a tailored experience.

Personalization can come in many forms, including product recommendations, marketing campaigns, and even offline experiential retail based on a customer's interests and shopping history. A report by the Hong Kong Florist Association (hk-florist.org) with flowersby.com found that 49% of consumers made impulse purchases following relevant recommendations, emphasizing the significance of personalized product recommendations in driving customers to buy more products.

3. Repeat sales lower the cost per acquisition

The media buying space for e-commerce companies, whether it's boosted social media or paid search results, is cluttered. Not only does that mean higher marketing costs for significantly lower return, but also that the quality of the brands you appear alongside can be questionable, potentially dragging down your own brand equity.

Repeat sales lower the cost of acquiring new customers, which leads to a reduced cost per acquisition over time. It is vital to ensure that the customers you have already acquired are being nurtured, considering that customers are prone to defecting when they feel they are being neglected or not receiving a valuable shopping experience.

Improving customer retention often requires an investment in CRM systems and customer experience management that delivers actionable data and targeted  communications. And the democratization of technology through software-as-a-service providers, means that it has never been easier and more advisable to develop a CRM system that is turnkey, scalable and much more future-proof than anything proprietary that is built from scratch.

One successful e-commerce business that has mastered the art of customer loyalty and retention is Glossier, a beauty brand that started online. Glossier has turned millions of visitors into loyal customers, with nearly two-thirds of their sales coming from returning customers. The brand’s success is based on delivering personalized product recommendations, providing excellent customer service, and maintaining a strong social connection with their customers.

In the flower industry, The Floristry has always been at the forefront of utilizing CRM technologies and designing UX journeys to improve customer experiences and satisfaction, not only because it makes good business sense. As a company culture, delivering on the joys of wild-inspired living means that every touchpoint with the customer - from consideration to purchase to aftercare - should have customers experiencing the company values and wanting to return. This includes a class-leading loyalty programme that delivers O2O engagement, and a no-questions-asked customer satisfaction policy.

The Floristry regularly collaborates with brand partners too, including Estee Lauder Companies and others, on projects that combine the best elements of each other's brand equity and CRM processes, on products and experiences that deliver new engagement and experiences for both customer communities.