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Want Better Conversion Rates? Focus on Customer Retention!

[fa icon="calendar"] Aug 10, 2018 / by Alex McEachern


Conversion, it is the golden term and metric in e-commerce these days. Most merchants are tracking their conversion under a microscope, and rightfully so. A small increase in your conversion rate can lead to a huge spike in profitability. But, most merchants are ignoring one of the easiest ways to boost their conversion rates.

The secret to a higher conversion rate… customer retention! But, what is customer retention?

What is Customer Retention?

Customer retention is an ecommerce marketing strategy that focus on getting a customer to come back and make a repeat purchase. Basically it is a strategy that focuses on increasing the profitability of your existing customers. This is a perfect compliment to a traditional ecommerce marketing strategy.

If you haven’t already started a customer retention strategy you can get started with the “Ultimate Customer Retention Guide.” Starting a retention strategy will ensure you have more loyal customers which have much higher conversion rates!

Loyal Customers Convert More

What if I told you you can increase your existing conversion rate by 9x, would you be interested? Of course you would! An increase in conversion to this magnitude is possible with more loyal customers. According to Adobe a repeat customer is 9x more likely to convert than a first time shopper.

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This means that increasing the amount of repeat customers you attract has a huge impact on your store. The Harvard Business Review estimates that just a 5% increase in your customer retention rate can lead to a 95% increase in profitability.

Each repeat customer you can get back to your site increases your overall conversion rate. But loyal customers also have a few other benefits that can really boost the profitability of your store!

Other Benefits of Loyal Customers

Loyal repeat customers provide more than just better conversion rates. A repeat customer also: spends more per order, spends more during key times, and is more likely to promote your store. Let me explain.

1. They Spend More

RJ Metrics conducted a study and found that customers who purchase frequently (aka loyal customers) spend more per order than one time shoppers. The results they saw were astonishing!

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They found that the top 10% of your customers spend 3x more on average than your typical customer. When you look at the top 1% of your customers that average order value is 5x more than the average customer.

In short a loyal repeat customer spends more each time they shop with you, which is a huge boost to your store.

2. They Spend More During Key Times

A “key time” is any time of the year where you typically see an increase in sales. This could be the holiday season or during your store’s “busy season.” Adobe’s ROI of existing customer report shows that your existing customers spend more in these times than a first time shopper.

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A first time shopper spends more during your busy time, but a repeat customer spends even more. The average increase in cart size during the holiday season is 17%. This alone is great but that cart size jumps 25% for every repeat customer who shops with you during that same time.

Not only do loyal customers spend more on average, but they also are more valuable during your most profitable periods. You can consider this an extra gift for the holidays!

3. Promote You More

If more spending wasn’t enough your repeat customers also are more likely to promote and share your store. A study by Bain and Company confirms that as a shopper makes more purchases so to does the amount of people they refer to your site.


As your customers become more loyal they also become your best marketers by referring their friends and family. These referrals also happen to be the most trusted form of advertising according to Nielsen.

Customer Retention is Important

An increase in customer retention not only increases your conversion rate, but it also increase your profitability and your store’s marketing reach! Yet despite this the average ecommerce store is only devoting 19% of marketing budget to retention. This is a problem if you want all the benefits retention provides.

The best way to get customer retention working on your store is with the right retention tools that work for your individual needs. My favorite retention tool combination is email marketing combined with a loyalty program.

Email marketing is one of the most effective and easiest ways to reach your customers. When you create email campaigns that focus on getting customers to return (retention emails) you have the foundation for a successful retention marketing campaign.

Combine those retention emails with a strong customer loyalty program and you have created yourself a nice retention marketing mix. A loyalty program gives your customers a switching cost and allows you to reward points for all sorts of profitable actions like: account registration, social sharing, and referrals.

You can easily discover if a loyalty program makes sense for you with our free loyalty check-list. Thanks for reading and good luck with increasing your conversion through customer retention!


Topics: Customer Retention, Loyalty Programs

Alex McEachern

Written by Alex McEachern

Alex is a Loyalty Marketing Specialist at Sweet Tooth, a loyalty and retention app for ecommerce sites. He’s a canuck (Canadian) who loves trivia, baseball, and ecommerce!

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