Lessons learned from Amazon’s 91% customer retention rate
Although not every company can’t be as large and influential as Amazon, every eCommerce company can take a page out of the retail giant’s playbook.
Whether it is tracking consumer behavior collection or alternative data collection, Amazon succeeds with the right retention tools and strategies.
Amazon’s giant retention rate: Can other companies match it?
One fantastic fact about Amazon is its astonishing 91% retention rate. This statistic is incredible compared to the 35% retention rate, which is considered fairly good by retail industry standards.
How is it that a respectable retention rate for a retailer 60 percentage points lower than Amazon’s? What is Amazon doing right? And can Amazon’s strategy be replicated by smaller companies?
Although an average retailer may not approach the 91% mark, every business can learn from Amazon’s stellar example. According to Alon Ghelber’s article on Forbes, personalizing the customer experience is one of the keys to Amazon’s customer retention success.
Why is retention so important?
Many marketing strategies are focused on finding new customers, but the majority of sales come from existing customers. With strong customer retention, there is no need to reinvent the wheel. Often it is easier to recommend a similar product to someone who already has a relationship with the brand.
Everyone has heard of Amazon. That is one advantage it has–the eCommerce giant doesn’t need to attract new people to its site, but it can instead provide recommendations to customers based on past purchasing and browsing habits. That is how Amazon customers keep buying what they need on the site again and again.
It’s all about data
The secret to Amazon’s retention success is not actually a secret, but it is a principle every eCommerce company knows–it’s all about the data. Amazon may have fancier tools at their disposal, but they are using the raw materials that are readily available to everyone online. With this data, they recommend products to return customers based on past purchases.
Another winning strategy is that Amazon will make recommendations instantly, as soon as the returning customer lands on the site. They will be greeted with similar or related items and notified of sales.
This type of marketing doesn’t focus on products the company wants to sell but on a specific customer’s problem. For example, suppose a customer purchased calcium tablets the last time. In that case, a site can recommend a different brand of calcium tablets in a more convenient form, such as chewable or magnesium or other vitamins.
Chances are, people who buy supplements are not going to stop buying them suddenly, and this ongoing need provides a marketing opportunity. Customer data can make it easier to send targeted promotional information to returning customers for the next time they want to buy a version of the item.
Amazon doesn’t just leverage data from purchases but keeps track of what individual visitors click on and what they put in their shopping carts. In many cases, shopping carts are not abandoned because they lose interest in the items they selected. They may often feel they don’t have time to make a purchase, or there may be an issue with checkout (another reason it is essential to check that a site’s checkout is working efficiently).
Following up with a text or an email when a customer has left items in a shopping cart is an effective way to recover what would otherwise be lost revenue. Software or apps automatically notify customers about items they have selected that they may have forgotten about.
How alternative data collection can boost retention rates and attract new customers
The data customers provide when they click on links and make purchases is valuable for zeroing in on individual buying habits for targeted promotions. In addition to this highly specific data, there is alternative data that is useful for segmenting customers into different personas based on preferences, lifestyles, and shopping habits.
Reviews on eCommerce sites and social media posts provide substantial information on what customers look for when they shop and what features they value. Identifying reviews and mentions of a product, analyzing them for content and sentiment, and creating actionable data insights is an important multi-step process for implementing a winning marketing strategy.
Data derived from user-generated sources gives a clear picture of what potential and current customers like about a brand and what they want to see improved. This is useful for directing a market strategy to appeal to specific consumer personas with distinct content and products that will appeal to them.
Learn from Amazon about data and customer retention
Amazon has access to an outstanding amount of data and tools to collect it.
Companies can learn from the way Amazon leverages data from reviews and consumer behavior to encourage existing customers to make additional purchases.
