How to Improve Customer Retention for Your Online Retail Brand

Are you old enough to remember Fred Flinstones’ car? You know, the thing with rocks as wheels that he had to quite literally run to start. Either way, let’s imagine this: there was always this moment just before the car moved when they would focus on Fred Flintone’s feet — running in place at a furious pace with zero gains. 

That’s what eCommerce customer retention gains can feel like — a lot of effort for minimal momentum, which can feel very tiresome. 

But you’re definitely not alone in this struggle! 

One of our partners, Yotpo, reported that as many as 70% of online retail store managers say that the retention rate remained the same, or even worse, than the previous year, showing that efforts are not translating into results. And like many of you, they had a lot of strategic questions on how to improve customer retention. 

So, we created this eCom customer retention strategy guide to help answer all the most common merchant questions and help you with solutions for some of your biggest retention struggles. 

Questions like:

Ready to speed up your retention gains — and get that hypothetical car moving? 

Let’s jump in. 

1. How do I build an eCommerce retention strategy that actually moves the needle?

One of the biggest challenges online retailers face is building a structured retention plan that answers the right KPIs. And while many businesses acknowledge retention is a priority, as many as 34% of eCom brands cite a lack of a structured retention strategy. 

So, how do you build a well-structured retention strategy? 

The short answer: with your engagement metrics.  

• Overlooking engagement metrics (like time between purchases, churn rate, and lifetime value) or being slack about engagement tracking (such as loyalty interactions, content engagement, and email open rates) can put a damper on your retention-building plans. 

This is because the key to a successful retention strategy is by not relying solely on loyalty programs. 

Instead, you need a mix of proactive engagement, personalization, and a smooth post-purchase experience — what we like to call a three-prong retention strategy approach. 

The Three-Prong eCommerce Retention Strategy Approach 

A three-pronged strategy combines great data and tracking with engagement and personalization. It then finishes it with a well-designed post-purchase experience and some good old-fashioned brand-building. 

This approach helps you strategically move those wheels and give customer satisfaction a good head start. Like this: 

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What could this look like in practice? 

Let’s say you’re an apparel retail brand who notices that many first-time shoppers/new customers aren’t coming back to shop from you. Your instinct probably would be to rely on discounts and points to entice them back. 

But this approach doesn’t get to the root of the bottlenecks to address them. It also eats into your margins! 

Instead, to make the right gains without hurting your profit, you could: 

1. Track time between purchases and customer engagement signals like email opens and product views.
2. Keep customers engaged between purchases with personalized style guides, interactive lookbooks, or exclusive “trending now” updates based on their preferences.
3. Individualize product recommendations based on this data — like sending a follow-up email with complementary accessories, chosen and styled in a way that feels fresh and relevant to each shopper. (Combine this with inventory optimization and merchandising strategies)

2. What role does my online merchandising strategy play in customer retention?

When your merchandising is optimized, you aren’t just guiding shoppers (more quickly) to the precise products they are looking for. 

You also reinforce trust in your brand, create a great overall customer experience, and manage those expectations. This means that: 

• Effective product sorting
• Strategic cross-sells
• And dynamic multi-parameter collections 

…all play a role in turning one-time shoppers into long-term loyal customers. 

Let’s break it down. 

1. Effective Product Sorting

Did it take them long to find what they needed? Do they remember wasting too much time and being frustrated? Shoppers won’t return if the search for what they needed was tricky. 

What to do instead:  

• Factor their preferences into your multi-parameter sorting strategy 
• Make filtering options intuitive for your shoppers 
• Use AI-powered sorting tools to keep personalized shopping searches quick 

2. Strategic Cross-Sells

Smart cross-sells increase order value while also reinforcing brand trust. They show customers that your recommendations make sense to them. And how to be smart about your cross-sells? 

• Add complementary product suggestions directly on product pages with an easy “Add to Cart” option
• Sort and display frequently bought-together items to make discovery and bundling easier
• Send follow-up emails recommending personalized products

3. Dynamic Multi-Parameter Collections

Advanced merchandising takes a multi-parameter approach. 

This means dynamic collections that leverage real-time customer behavior data, sales trends, inventory levels, and trends create a more engaging store customer experience — all of which lead to more repeat visits. 

What advanced merchandising strategies to start with? 

• Controlling product segmentation dynamically based on various criteria such as sales, inventory, margins, tags, price, brand, etc.

• Adjusting collections based on sales pace, inventory levels, and demand forecasting, as well as personal preference and customer behavior, to ensure the right products stay visible for you and your customers. 

• Personalizing on and offsite merchandising segmentation to show a new customer (vs. a returning existing customer) different product options.  

What could this look like in practice? 

Our merchants, DailySale, implemented these strategies to create a dynamic mix of products based on advanced product analytics. When they switched, they increased their year-on-year click-through rates by a whopping 221%! 

And they are not the only ones. 

Here are some powerful stats from our Intersport DK advanced merchandising case study: 

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3. What’s the best way to keep customers engaged between purchases?

There is a big chance that your post-purchase engagement gaps are leading to much higher churn rates than you were hoping for. 

In fact, the same Yotpo study we mentioned earlier states that as many as 42% of brands blame their lack of retention on a lack of engagement between purchases. On the other spectrum, on average, brands that did maintain engagement see higher repeat purchase rates. 

This is definitely where your loyalty programs come into play. 

But simplified generic approaches aren’t enough to make a real impact. Instead, brands are: 

1. Adding gamification or interactive elements (quizzes, milestones, member-exclusive content) to keep shoppers thinking of your brand between purchases. 
2. Investing in community-building tactics such as forums, exclusive access clubs, or brand challenges that help turn passive buyers into brand ambassadors.

Why? 

These types of strategies don’t just get you one more purchase from a shopper; they help you build long-term loyalty. And while, yes, loyalty programs are essential, they are only one piece of the puzzle.  

Here are the top six ways to engage customers between their purchases, based on some recent case studies: 

1. Cross-channel engagement. Using an omnichannel outreach approach (e.g., email + SMS, or email + in-app messaging) can lift retention rates by up to 37%. 

2. Loyalty Programs. Incentivizing repeat business through points, member perks, and tiered rewards can increase average customer spending by 46%. 

3. Product recommendations. Integrating AI-driven recommendations into marketing and email campaigns can boost conversion rates by 29% and improve ROI 88X.  

4. Automation. Automating re-engagement campaigns (reminders, replenishment prompts, etc.) increases repeat purchase frequency and recovers lost sales.

5. Email merchandising. Sending regular, value-driven email campaigns can increase a customer’s likelihood of making another purchase up to 38X.

6. Community. Building a brand community or content ecosystem can yield up to a 28% year-over-year lift in repeat purchases.  

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What could this look like in practice? 

Imagine a beauty brand is struggling with repeat purchases because customers only buy when their favorite product runs out. 

Instead of sending generic promotions, they could:

• Launch an interactive skincare quiz that recommends new products based on past purchases, keeping customers engaged
• Create a VIP club where members unlock early access to trending beauty drops and get rewarded for sharing skincare tips in a private forum

The more customers engage with the brand — even when they’re not actively shopping — the more likely (and more quickly) they will return for their next purchase.

But is there such a thing as too much engagement? 

4. How do I regularly reach out to my customers without overwhelming them?

While you don’t want to under-engage with customers, you also don’t want to over-engage. 

Why? 

Overcommunication = marketing fatigue = less repeat business. 

As many as 25% of consumers unsubscribe from a brand’s emails at least once a week, mainly due to irrelevant or excessive messaging. Meanwhile, 69% of US consumers say they unsubscribe if they get too many emails from a single brand.  

And that’s just email marketing. 

Unbalanced online merchandising can also put out the fire on customer engagement and customer retention rates. 

Instead, you need a balanced approach that offers personalized and relevant suggestions without inundating shoppers with pop-ups, or product recommendations, or best-selling products. 

So, what’s the solution? 

• Choosing relevance over volume 
• Segmenting to avoid overwhelm 
• Optimizing your communication frequency 

Let’s look at each in more detail. 

1. Choosing Relevance Over Volume 

Leading eCom brands who segment their shoppers effectively and personalize all between-purchase outreach see higher open rates and retention than those relying on mass marketing. For example:

• Overstock migrated to a cross-channel platform and sharply reduced email and push notification send volume, instead sending fewer but more relevant messages​ — resulting in a 21% conversation rate increase. 

But email marketing volume isn’t the only area you want to fine-tune in your communications. 

2. Segmenting to Avoid Overwhelm 

It’s simple: Making sure shoppers only get the messages that resonate with them personally at any stage of the journey. This applies to anything from your Shopify product sorting to your SMS marketing. For example: 

• Global fashion e-tailer NA-KD Fashion unified their customer data to personalize outreach across email, SMS, push, and onsite channels to replace generic coupon blasts with automated, personalized journeys triggered by user behavior​ — resulting in a 25% increase in customer lifetime value (CLV).

This CLV lift signals that shoppers remained active and spent more over time versus those in the old one-size-fits-all program.

3. Optimizing Your Communication Frequency  

To make sure your messaging frequency isn’t off-putting, you want to tailor not just what you send but how often — and via which channel. The best way to do this is by adapting to a shopper's preferences. 

• One way brands do this is by asking for communication preferences (e.g., opting into SMS, or choosing email frequency) as part of new customer sign-in or loyalty program onboarding. 

You would also want to invest in send-time optimization strategies and tools that help you reach your customers when they are more likely to engage. For example: 

• Fast-growing Gen Z fashion retailer Princess Polly unified their marketing by integrating SMS with their email and loyalty program efforts, reaching customers on their preferred device (mobile) with exclusive content. This yielded a 73X ROI overall, and an 84% conversion rate​ for the welcome text series. 

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In all these instances, the recurring theme is that quality over quantity always wins. They also help you maintain customer satisfaction, not just at the time of purchase but in between checkouts as well. This means turning new customers into repeat shoppers. 

Brands that prioritize relevant, segmented content and orchestrate messages across channels see better results and healthier subscriber relationships.

What could this look like in practice? 

Imagine a specialty pet food brand who caters to pet owners looking for premium, health-conscious options. 

They want to keep their shoppers engaged between purchases but find that too many messages, pop-ups, and broad product recommendations are causing drop-offs rather than driving their customer retention rate.

Instead of bombarding customers with generic promotions, they could: 

• Send tailored feeding schedule reminders
• Guide customers to set their preferred frequency for brand communication
• Automatically sort products based on what’s relevant to each shopper — instead of pushing the same bestsellers to everyone  

5. Why are my first-time shoppers just not coming back at all? 

Crappy churn rates are not as uncommon as you might think.

According to some studies, only 30% of first-time DTC buyers return for a second purchase in the first place, thanks to these likely culprits: 

1. Mismatched expectations 
2. Slow shipping, expensive delivery, or a clumsy returns process
3. Lack of post-purchase communication 
4. Poor or nonexistent shopper onboarding experience (unclear product usage guidance, lack of follow-up)

That’s not to say you shouldn’t be aiming for much higher numbers —  some eCom stores reach an average CRR of 62% when addressing these four key barriers of a well-performing customer retention strategy. 

And how do you do that? 

Start by managing customer expectations very early on in your funnel. 

If the product quality, fit, or function doesn’t match what was promised, shoppers will not come back. The best way to do this is with AI-driven merchandising, optimized product pages, and transparent details — the fine print. 

Then, look at your shipping. Customers today expect fast, affordable, and hassle-free fulfillment, so: 

• Offer multiple shipping-speed options 
• Keep shipping costs transparent 
• Provide clear tracking updates and proactive delivery notifications 
• Make returns as hassle-free as possible 

And then, when they have received their delivery, don’t ghost them. Keep your store brand top of mind by: 

• Sending a post-purchase email series with order updates, tips, and product recommendations 
• Using SMS or app notifications to reinforce delivery tracking and key updates 
• Inviting shoppers to engage through loyalty programs, exclusive content, or social communities 
• Following up with hyper-personalized check-ins or customer feedback requests 

Lastly, don’t forget that shopper onboarding strategies (customer experience) are crucial for eCom as well as other niches.  

• A clunky or nonexistent onboarding process can confuse shoppers or those unsure of how to get the most out of their purchases 
• Your existing customer segment is less likely to return if they don’t know how to use, style, or care for a product
• Slow customer service that isn’t practical from the top of the funnel to the bottom can turn first-time shoppers away

6. How can I turn one-time buyers into a loyal brand community?

Any retail customer-retention plan's goal is to grow your loyal customer base — or if it isn’t, it should be. Because you don’t just want to retain customers, you also want to turn them into brand fans and ambassadors. 

These loyal customers stick with you even when the competition heats up. And they do this because they trust your store. 

Trust and customer retention rates go hand-in-hand — even more so with newer Gen Z shoppers.

Edelman's 2023 Trust Barometer report found that 79% of Gen Z consumers believe (more than any other generation) that it's now more important than ever to trust the brands they buy from. They are also: 

• More price-conscious 
• Making fewer impulse purchases 
• Researching more before buying 

Meanwhile, 78% of all consumers say they uncover things that attract them to a brand first before shopping, driving loyalty only after the first purchase.

So, what does this all mean? 

Online retail brands who go beyond transactions and create shared identities, values, and engagement opportunities (social media challenges, behind-the-scenes content, sustainability initiatives) not only build long-term shopper relationships but a strong, loyal customer base. For example: 

• Jewelry brand Missoma's referral program led to a 37% higher retention rate for referred shoppers, who in turn were four times more likely to refer others.

What could this look like in practice? 

Let’s imagine for a moment that you’re a fitness apparel brand who wants to turn one-time buyers into an engaged brand community of existing customers. You would need to: 

• Focus on building connections with your customers beyond the first sale

To do that, you might: 

1. Launch an exclusive online training club where customers who’ve purchased get access to free workout guides, live Q&A sessions with trainers, and a space to share progress and motivation. 
2. Offer members who actively participate early access to new collections and exclusive discounts based on their engagement. 

But there is a catch: You don’t want to get stuck in a discount loop. 

7. How can I increase repeat purchases without the need for constant discounts?

The short answer? It’s all about gaming your product recommendations with more personalization. 

Let’s look at the statistics. 

According to the Salsify and Digital Shelf Institute 2024 report: 

• 37% of consumers said they make more frequent purchases due to personalized recommendations
• Personalization increases engagement across all generations, with Gen Z (53%) and Millennials (48%) being the most influenced 
• 22% of shoppers expect brands and retailers to deliver personalized shopping experiences

The bottom line is this: personalization, ease of shopping, and relevant recommendations all contribute to repeat purchases and long-term engagement — all of which are achievable without excessive discounting. 

Why? 

When shopping feels personal, and rewarding, customers will keep coming back again and again (AKA, customer loyalty) — for the experience, not just the deals. 

And how can you ensure this? Here are some ideas: 

• Show customers exactly what they need before they even realize they need it
• Instead of another “15% off” email, send a nudge with styling tips, refill reminders, or new arrivals based on their shopping habits 
• Use dynamic AI-powered collections to keep things fresh while factoring in past purchases
• Opt for VIP early access to new products, limited-edition drops, or invite-only collections that are highly relevant to each shopper so that customers feel like insiders, not just discount hunters
• Make sure you have well-timed, personalized replenishment reminder strategies in place and the simplified one-click reordering to back it up

What could this look like in practice? 

Let’s take a hypothetical, premium online kitchenware brand as an example and assume they want to increase their customer retention rate without relying on endless discounts. 

First, they would rebuild their customer retention plan, focusing on personalized product discovery and customer engagement. Their post-purchase strategy then would look something like this: 

1. After a customer buys a high-end chef’s knife, they receive a follow-up email with expert tips on knife care and maintenance, along with personalized recommendations for a matching cutting board and sharpening tool.  
2. A few weeks later, the brand sends a personalized email with a dynamic collection update, showcasing trending kitchen tools that complement the shopper’s purchased product.

And then, instead of generic promotions, they could offer VIP early access to limited-edition product collections that are also dynamic, available first to customers who have previously engaged with their recommendations. 

8. What’s the best way to bring back dormant customers?

With win-back campaigns. But not just any win-back campaign, one that factors in personalized incentives for inactive customers. These can be done within your customer retention strategy for multiple channels, including your: 

• Customized product recommendations and merchandising
• Email and SMS marketing and push notifications 
• Content marketing 
• Loyalty programs and customer support (+ customer feedback strategies) 
• Retargeting digital ads 
• Direct mail 

Email win-back campaigns are the most common — with a good track record to back them up. But that’s not to say you can’t think outside the box and go old-school. Zogic's win-back campaign included sending postcards, which saw a 500% ROI increase and a 140% order increase.

This doesn’t mean you need a dedicated win-back campaign to see positive win-back effects from a campaign. 

Let’s look at an example of what could have been: 

• British menswear brand Percival used slightly unconventional promotional strategies, including orchestrated discount code mishaps and private group chats on WhatsApp and Instagram to drive their community. On the day of their campaign, they saw a 76% revenue increase. 

Which is great, right? 

Yes, Percival’s success shows that creative engagement can drive revenue …but with a few small tweaks, these same tactics could have doubled as a powerful win-back strategy.  

What could this look like in practice? 

Percival could have: 

• Used data to identify lapsed buyers and personally invite them to Closed Circle or exclusive early access
• Offered targeted, time-sensitive discounts for customers who haven’t purchased in X months
• Leveraged their community-driven influence by highlighting customer testimonials from the group to re-engage past shoppers 

9. How do I engage VIP loyal customers without over-relying on loyalty programs?

Loyalty programs are great but aren’t the only way to keep your most loyal customers engaged. 

In a recently updated Smile.io study, they report that: 

• 41% of an eCommerce store’s revenue is created by only 8% of its customers, and your top 5% of shoppers (loyal customers) generate 35% of revenue.

So, what should online retail brands focus on instead of just offering points and discounts? 

• Recognition
• Exclusivity 
• Value-driven experiences

VIP shoppers stick around because they feel seen, appreciated, and special, like they’re getting something beyond what the “average” shopper receives.  

How can you do this? 

With exclusive access, personalization, and community. 

This could include: 

• Giving your VIPs first dibs on limited-edition products, seasonal drops, or restocked bestsellers 
• Using past purchase customer data to curate private styling sessions, or concierge-level customer support 
• Offering your most loyal customer base exclusive behind-the-scenes content — like sneak peeks at upcoming collections, factory tours, or designer interviews
• Giving your top shoppers challenges or milestones to keep them engaging 
• Creating a private group or club where loyal customers can interact, share product feedback, and help shape future collections or offerings 

What could this look like in practice? 

Let’s say there is an online coffee retailer who wants to engage with their most loyal customers — without relying too much on their loyalty program points. They could: 

1. Launch an exclusive tasting club where top existing customers get early access to limited-edition roasts and invites to virtual coffee-tasting sessions with expert baristas.
2. Give members access to a private community where they can share brewing tips and vote on upcoming blends.

Either of these two options would make their VIP customers feel valued, engaged, and excited to stick with the brand. They would also give them valuable customer feedback that they could use to optimize marketing strategies across all their digital touchpoints. 

The Wrap-Up: What do I need to do to get my store customers to shop more often?  

By implementing all the strategies we’ve highlighted in this “How to improve customer retention for your retail brand” guide, of course!  

Everything we have taken you through will help you fine-tune your retention strategy, increase customer retention rates, and build a post-purchase funnel that turns a new customer into an existing customer. And then filter them into your most loyal customer groups. 

In other words, help propel your retention strategy (the Flinstone car) forward for less effort and spend — and frustration! Because no one wants to feel like they are just running in place with their strategies. 

Here’s a reminder of these result-moving strategies: 

• Well-timed replenishment reminders and simplified one-click reordering
• Personalized product recommendations 
• Strategic merchandising across your entire pre and post-sale funnel 
• Highlighted trending and seasonal collections that match up with customer preferences
• Exclusive early access to new arrivals 
• Interactive engagement strategies (like quizzes and challenges) 
• VIP experiences instead of discounts for your loyal customers 
• Well-scheduled outreach that is relevant 
• A brand community that keeps shoppers engaged 

And what will these tactics do for your retention marketing results and gains? 

Hello, healthy eCommerce retention rates, and goodbye customer churn.

Hello, brand advocate, goodbye one-time shoppers.  

Hello, customer interaction, goodbye customer complaints. 

Hello, repeat customers, goodbye fickle eCommerce shoppers. 

Happy selling! 

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