17 Crazy Effective Customer Retention Strategies For a Retail-Based Business
Let me just say: I’ve got huge respect for business owners in retail.
That job takes some serious attention to profit-margin detail that I know I couldn’t handle the stress of if I were doing it day-in, day-out.
It’s one of the reasons I opted to write & give advice professionally instead.
So kudos to you for getting into the business in the first place. I very much appreciate what you do—because I do have to buy things sometimes, and don’t know how I’d get what I need without you facilitating that interaction. So, thanks.
And while I’m not a business owner in retail, I’ve done plenty of retail marketing and have seen how, unlike most other marketing strategies, boosting customer retention can seriously up your bottom line.
Because when it costs around 7x as much to get a new customer to buy than it does to convince an old one to make another purchase? And when that old customer’s going to spend something like 30% more anyway? You need to look for inexpensive marketing tactics.
It only makes sense, right?
So let’s talk about some of those strategies today. We’ll go ahead and dive right in:
1. Educate, Don’t Just Sell, Sell, Sell
Sure, you can collect the email address of everyone who buys from you and send them an email every week full of links for them to buy more products.
And yes, it will probably work… a little bit.
But the thing is, consumers (especially web-savvy ones) are tired of being sold to online.
They see ads everywhere, and when your emails to them are nothing but ads cluttering up their inboxes, they’re going to be more likely to delete them than they will to click through and actually purchase something.
And a lot of them will quickly unsubscribe.
Instead, after someone buys something, try educating them.
I don’t mean mansplaining them or talking down to them… but genuinely help them understand their purchase better.
Tell them the history of it.
Let them know where the materials came from.
Give them a sneak peek on the journey you took to find the perfect provider before you ever started production.
Or just email them a list of hints and hacks on how to make the most of what they’ve just bought.
If you do this, it reinforces that their purchase was a good decision, and by making them feel like an educated, proud consumer, they’ll be even prouder to be a customer of your brand.
So when the time comes to pitch them an upsell, a cross-sell, or just introduce them to some new product options, they’ll be far more likely to actually consider the purchase.
I bought a London Pass for my recent trip to London, and right after my purchase went through, I got this email empowering me to use my purchase correctly and offering more information to make my overall visit a much happier one.
2. Sell Services, Not Just Products
Here’s where you can really get creative in deciding what you sell.
Remember, just because retail is strong with competition doesn’t mean your business model has to look anything like your competitors’.
If you sell clothes, offer a style consult.
If you sell furniture, offer to do a Skype call to see the room and offer potential color palettes for a DIY room re-do.
In fact, don’t take your competition into consideration at all.
Instead, start with some brainstorming based in the blue ocean strategy.
Look at your customers and list out their biggest pain points in relation to what you sell.
If you sell spices, is it that they cook all day for refined, picky eaters?
If you sell yard ornaments, do you notice a lot of people talking about how they can never decide how to arrange the flowers in their garden?
These are all wonderful opportunities to offer a service on top of your product to boost customer loyalty.
Not only is it another revenue stream for you, but by doing it, you actively show the people who buy it that you’ve got some skin in the game along with them, because you’re spending time with them one-on-one.
And because of that, as their needs arise for your products, they’ll be far more likely to return to you for purchases before they ever consider your competition.
3. Track Data & Personalize Your Messages
Especially if you sell online, keeping tabs on your target market to know what they like is crucial to showing the products they’re interested in.
If you have your own website, you can install cookies to track who views what pages.
If you don’t have a website and sell via a platform like Etsy, you can get a social media monitoring tool to know what’s popular at the moment via platforms like Pinterest and Twitter.
But let’s say, for example, that you’ve got your own website selling screen-printed novelty T-shirts.
A new customer came to your site 3 months ago and bought a gag-gift shirt as a birthday present.
You know they’re interested in gag gifts, so when you send out emails featuring other products to purchase, you can make sure to feature some of those.
But let’s say they then come back to your site three months later and are looking at some of your shirts that support non-profit organizations.
They haven’t purchased one yet, but they’ve looked at two or three.
If you have cookies tracking their activity, you’d have this information and could send them an email with more information on the non-profit they were thinking about supporting, with a link back to your site to purchase that t-shirt.
They may have forgotten about it otherwise, but by personalizing the communications you send to them, you’re ensuring their loyalty and increasing their likelihood of a second (and third) purchase.
4. Host Contests & Challenges
Hosting a contest—especially if that contest is challenge-based—really creates a sense of community (read: loyalty) amongst your existing customers and fans.
During these online events, you bring people together to achieve something bigger together, and make them feel included.
Plus, you help them achieve actual progress towards their goals related to why they’re a customer of yours in the first place, which can help drive more sales.
I’m in no way any kind of interior decorator or home DIY-er in real life. But the fact that HGTV gives away free houses pretty regularly (and yes, I enter to win them) keeps me pretty loyal to their brand. It all started when they offered a free “urban oasis” house in my city last year, and I’ve been hooked ever since.
5. Let Your Customers Refer Their Friends & Family
Yes, referrals are great. (And profitable.)
But I’ll be honest with you: the core goal of this strategy isn’t the referrals in and of themselves.
Yes, they’re valuable when they come through, but this strategy is much more about the psychology behind loyalty than it is behind driving profits.
Here’s the thing: when you get someone to rate how likely they are to refer a friend—even if you don’t offer a way for them to refer for an incentive—you can always correlate the likelihood of referral with their potential profit.
You know how some companies are always asking you to rate on a scale of 1-10 how likely you’d be to refer someone?
This is what I mean. We’ve all seen these before, haven’t we?
This is why they do it.
Personally, I’ve noticed CRM tools doing it as well as my old internet hosting company.
For my current CRM, I give them a 10 every time, and I keep buying in—month after month.
But with my previous web hosting, for example, it was always between a 3 and a 5 for me.
And you know what?
That dissatisfaction manifested itself in me canceling my services with them and moving elsewhere.
And you can give a 1-10 scale to your customers too. (It’s usually given after an interaction with customer service.)
If someone isn’t in the 8-10 range, you can ask them why, and work to improve.
But if they’re already there, you can know that they’re happy customers and work on a plan to upsell or cross-sell them products or services that make sense for them.
6. Demonstrate Values & Ethics
This is a short one, but buyers love it when the companies they buy from have ethical morals and act out on them.
It can be as simple as displaying a non-profit you support every month or talking about how a percentage of your sales goes to an important cause.
Beyond supporting other organizations, buyers also care about how you source your materials and ingredients, so you can be very open about how you do that in an ethical, sustainable way.
This strategy isn’t a hard-driver of more sales from existing customers, but it does help people who buy from you feel better about their purchases, increasing their brand loyalty and your word-of-mouth power.
7. Always Respond ASAP
If at all possible, have customer service representatives sitting by phones or online chat boxes to help your customers if and when they run into trouble.
If it’s not possible, at least put some email automation in place that sends out a message the instant someone puts in a support request to let them know you’ll be back in touch with them ASAP.
The reason behind it is this: no one likes to feel ignored.
And people especially hate to be ignored when they’ve got a question they need answered or when they can’t get a purchase to go through. (We’ve all been there… it is frustrating, isn’t it?)
But when you reassure your customers that they’re important to you and that you want to do whatever you can to help them out… even if you can’t do it that instant… you’re reaffirming that you’re a brand to be trusted with further business.
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8. Offer Try Before You Buy
If you sell out of a brick-and-mortar location, this is a pretty standard practice.
You either have free samples, let people smell what they’re buying, let people see what a product looks like on display and put together, or you have fitting rooms for them to try on clothes before they drive home with them.
But if you sell online, it’s always a little tricky.
I’m hesitant to buy clothes online because I never know how they’re *really* going to fit or look on me.
Same with new perfumes… you can describe it with beautiful words all you want, but how do I know that I’m going to love the smell?
So if you can swing it, experiment with a try before you buy model.
Fashion subscription box companies use this model… they send you a box of things to try on, and you only pay for the items you keep.
Other companies, like Warby Parker that sells eyeglasses, send out test frames for you to try them on before you put down the money for a pair in your prescription.
This is a HUGE step for helping subside customer fears that something won’t fit or look right.
Here, Warby Parker lets you try on your favorite frames risk-free at home… just like you would if you’d walked into a brick and mortar store.
9. Use Testimonials & Social Proof
If someone’s a repeat customer, they’re probably already sold on what great products you have and what a great company you run.
But when you can include testimonials alongside your products, you can show them that they’re in good company every time they consider making another purchase.
(Coincidentally, it’ll also help you close deals with brand new customers.)
Sometimes, you’ll see companies trying to employ negative social proof—as if giving an air of exclusivity.
“Only ### in the world have these.” or using a small number to “prove” social proof that really isn’t all that impressive.
Exclusivity can work, but usually only when displayed in other ways.
If you don’t have the numbers to say that you’ve got 5,000 happy customers with one product, all you need is one or two gushing reviews with photos of the customers to push people who are on the fence over the edge to purchasing.
Plus, when current customers see these testimonials and your high social proof numbers, they’ll feel like they’re a part of a smart community and will want to continue to align themselves with you and the other smart people who buy from you.
10. Invoke Reciprocity
In simple terms, reciprocity means that when you receive from someone, you’ll look for ways to give back to them so the “debt” can be repaid.
But reciprocity works even better when there’s an element of surprise—as in, you give something to someone who’s not expecting it.
This can be a voucher for a free sample or product, a discount code, or store credit just as a thanks for being a loyal customer.
And here’s the clincher: you don’t have to give away that much for this to be insanely effective.
Some studies have shown that an amount worth as little as $0.10 can get the job done and create a sense of obligation in your customers to either buy from you again or at least send business your way.
Here, The East India Company is offering an exclusive gift for people who spend $12.50 or more. It’s “exclusive” and “free,” so the pass holders who read this will be a lot more excited to actually visit the shop. (I wasn’t planning to go, but I went in after I read that.)
11. Start a VIP Program
And get this: you can charge for your VIP program.
I think we’re all familiar with the model Amazon uses for Prime: they charge you $99 per year (less for students), and that yearly fee includes unlimited free, two-day shipping.
If you don’t have a Prime account, on the other hand, you’ve got to spend $35 before you get free shipping—and it isn’t the fast two-day kind.
But when Amazon charges $99 for their Prime (VIP) membership, something amazing happens: instead of just buying what they normally world from Amazon, customer spending nearly doubles.
Because they’ve already invested a decent amount of money to buy privilege with the company, Amazon customers feel they have to make that money worth it, so they shop on Amazon more often than they would if they hadn’t paid for the Prime membership.
(People who don’t have Prime accounts spend an average of $600 per year on the platform, and people who do have Prime accounts spend an average of $1,100.)
Pretty big difference, no?
And what an awesome way to increase customer loyalty to your business and ensure they shop with you and not your competition.
12. Instill a Sense of Community
I bought my first pair of Chacos eight years ago.
And while I still have that same pair, I’ve become so loyal to the company and its product that I’ve sent my sandals in to have new soles put on them and to have new straps put on when the originals were wearing thin.
Sure, it has a lot to do with the product quality and the values and ethics the company displays that we talked about in tactic number six, but I just love the way Chaco-wearers feel a part of a broader community.
You see, Chaco sandals have a very distinct look, and if you own a pair, you can easily spot them on someone else.
And even if you don’t know the person, you know they appreciate adventure and a good, comfortable, warm-weather adventure shoe just as much as you do. You feel like companions even if you don’t know each other.
But beyond that, the company actively creates a sense of community among their customers, encouraging them to use hashtags like #ChacoNation and to post pictures of their sandaled feet on adventures via social media.
Not everyone loves Chacos, but those that do can’t get enough of them.
So feeling like you’re a part of a broader community, even if you don’t personally know anyone else in that community, is a huge loyalty-builder.
For me, it worked in making secondary purchases to update my sandals, and if the time ever comes to fully replace them, I know I’ll buy another pair of Chacos and not some other brand.
Here’s some recent images with the #chaconation hashtag on Instagram. Clearly these people sharing their adventures in their Chaco sandals feel like a part of a wider community.
13. Loyalty & Rewards Programs
The classic example here is the coffee shop handing out punch cards so their customers get a free coffee after they purchase 10.
And there’s nothing wrong with that sort of loyalty program… except that now it’s kind of expected and a little commonplace.
They work though, so there’s no shame in instituting a loyalty program like that if you’ve got the business model for it.
But to take things to the next level for your own business, think about loyalty programs you belong to and participate in.
Do you collect airline points and use airline-specific credit cards?
Do you take your pet to only one veterinarian in town?
Do you love how your kid’s orthodontist uses a reward system so they’ll brush and floss everyday and keep their braces clean?
What aspects of those programs that you love so much can you implement in your own business?
If you like the way airlines run their loyalty programs, you could also develop a points scheme where your customers get points for buying from you, using your products, and buying from your partners. Then you could let them redeem those points for store credit.
If you like receiving little perks after supporting a business 2-3 times, you could implement your own “secret” rewards system where you surprise customers with a reward after they purchase from you at different levels.
These are all valid approaches, they all improve the shopping experience with you, and most importantly, they’re all really effective at boosting loyalty and revenue from repeat customers.
14. Gamify Your Shopping Experience
If your brand had a particularly high “fun” factor, making a game of interacting with your brand can really increase customer loyalty.
I know I talk a lot about airlines, but I remember when the American Airlines / US Airways merger happened.
On Facebook, American Airlines ran a fun game where you could do different online tasks to familiarize yourself with their brand and earn frequent flier miles for your account.
They called it the AAdvantage Passport Challenge.
Here’s what American Airlines’ gamified experience looked like. (Photo from BoardingArea.)
If you did their trivia games, you could earn up to 700 miles.
For sharing the challenge on social media, you got 350 miles. (I even remember convincing my mom to sign up for it so I could get more miles.)
And if you flew on an American or US Airways flight while the challenge was happening, you could earn thousands more.
I was relatively new to American Airlines at the time, but three years later, I’ve got a credit card from them, and I’ve booked two “free” flights using points I earned during that challenge and other credit card promotions.
To say I’m loyal is an understatement.
But you don’t have to go all-out like this or have a robust program like the airlines for this gasification strategy to work for your business.
Instead, you could do something like hiding “Easter Eggs” on your site and leaving clues for your customers to follow so they can uncover them.
They can end up on pages that give them discount codes, store credit, or some sort of freebie.
The idea though, is to get them interacting with your brand and having fun while doing it—which will inevitably build a strong affinity for your brand and your products.
15. Use Nice Packaging
Remember the last time you unboxed an Apple product?
Whether it was an iPhone or a MacBook Air, I know you do. (Mine was an iPhone.)
Those guys have their packaging down pat, and it’s always a pleasure when your lovely piece of technology arrives in the mail and you can enjoy the magical unwrapping process.
In fact, it’s often so cathartic, people will actually record themselves unwrapping their products and post the video of the process on YouTube. (I’m not kidding… look it up.)
But you don’t have to hire full-time packaging engineers like Apple undoubtedly does to give customers who order from you an amazing “opening” experience.
The outside cardboard box is usually pretty standard, but it’s what’s inside that matters.
Is it a beautiful, branded thank-you card with instructions on making the most of the product?
Or is it a cheap plastic bag with lots of confusing tape all over the place?
Is haphazard bubble wrap? Or is the bubble wrap neatly wrapped around the item with a ribbon bow to seal it?
You see what I’m getting at. A little effort goes a long way.
In the movie The Intern, Anne Hathaway’s character orders some of her own products to her home just to see what the unwrapping experience is like.
When she realizes it doesn’t wow her and that some things are just thrown into the box, she goes to the shipping warehouse herself and makes sure the people in charge of the packaging are doing things meticulously, to the T, even if it does take them more time.
Not saying you have to do this… but it is something to think about.
If you were a first-time or repeat customer, would you be impressed by the unboxing experience and delivery of your product?
Or would it just be kind of meh?
If it’s not so impressive, what can you do to improve it?
16. Give Things Away for Free Every Now & Then… Just Because
I don’t mean as a part of a promotion either… just give things away to customers once in a while just because you feel like it.
My local Whole Foods is ON this strategy.
In the past six months, I’ve gotten free ice cream because I forgot my wallet at home, a free canister of vegan mayo because of a pricing error on their end, and a cashier in the express line even offered to give me a free cloth shopping bag because she saw me checking them out while I was waiting in line.
I don’t know about you, but no store has ever been so kind as to give me free things… let alone give them to me so freely.
And while Whole Foods isn’t exactly known as the cheapest supermarket in town, they’re definitely the ones that take up the fuzziest feelings in my heart as far as supermarkets go. (Can you feel it in the way I’m writing about them?)
I already loved Whole Foods for being so vegan-friendly, but now I genuinely feel like they care about me too.
I just couldn’t believe their acts of kindness, and it always meant so much to me in the moment.
They’ve never offered to give me a full cart of groceries for free, and I would never expect them to. Just kind, small, ~ $5 surprises.
The idea here is to give away something of low value every once in a while and to just sit back and watch how loyal people become. (And, most importantly, to do it with a kind heart.)
17. Send Out Newsletters That are Actually Interesting
We touched on this a bit in strategy #1 (providing education) at the top of this article, but let’s dive in a little deeper.
The thing is, most retail newsletters are nothing but thinly veiled attempts to get people to buy more.
In fact, most of them aren’t even thinly veiled.
They’re like mini catalog spreads with huge, colorful call to actions to BUY NOW! or SAVE 25% TODAY ONLY!
But when you’re looking at the long-game of customer loyalty and profitability, these types of emails definitely aren’t loyalty-inducing pieces.
So instead of using your email (or carrier mail) newsletter to just try to sell more things, make it interesting.
If I buy something from an online store, 95% of the time I almost instantly unsubscribe to their newsletter. I just hate being so overtly sold to in my inbox with no personal touch.
But I’ve been on some email lists for years and have no intention of unsubscribing.
MailChimp, for example.
Yeah, I’m their customer, and yes, there’s things they could upsell me on.
But you know what?
I can’t even remember the last time they tried to upsell me.
They might have sent out some messages about cool new features they did across their business, showing me what I could have if I did upgrade, but I never felt pushed.
Plus, they’re hella interesting.
In 2016, they started their own online store, just for the sake of it… just so they could learn more about selling online and email marketing from their customer’s point of view.
I don’t even work in ecommerce, and I find these messages fascinating. They’re interesting, informative, fun, and story-based. All the best ingredients for good content marketing.
That’s not to say you can’t still sell things, though.
Trader Joe’s sends out a quarterly newspaper-like advertisement, and I eat it up (figuratively, of course) every time I see it in my mailbox.
I usually exclaim something out loud, take it out of my mailbox, deposit the junk mail in the recycle bin, and put their ad on my bed for cozy nighttime reading. (Yes, I’m a nerd.)
And while I’m reading, I circle the items I want to buy the next time I visit. They might be item’s I’d have looked over completely on a normal trip, but I found them so interesting that I couldn’t say now.
I’m thrilled and so is Trader Joe’s. It’s a win all around.
Conclusion: Start With One Tactic & Build From There
Alright, so have some ideas on how to implement more customer retention strategies in your retail business?
The important thing when building any strategy is to start small, go one step at a time, and then watch your efforts pay off with a huge snowball effect.
So tell me… how are you going to adapt the ideas talked about in this article… or what are some ways you’ve already put your own twist on these ideas?
I’d love to know—tell me in the comments!