15 Proven Strategies How to Retain Customers During a Recession

What’s the key to running a successful business in the long term? Customer retention. Many brands we know today have succeeded despite the tough financial times and the tough competition because of adopting the right customer retention approaches.

With the increased talk about a potential recession in 2023, it’s becoming even more important for ecommerce businesses to find the best way not only how to attract new customers but also how to retain existing customers.

Retaining customers is good for a company's finances and steadfastness, no doubt, but it’s also crucial for its reputation and name within the industry. There are a variety of ways that companies create strategies for customer retention. However, not all are good enough to help during difficult times like a possible recession.

According to a survey by the US National Association for Business Economics, 58% of surveyed economists believe a recession will hit the US market before the end of the year. The situation in many markets outside the US economy is equally gloomy. A potential recession will hit almost every industry albeit at a different rate. Moreover, traditionally startups and small enterprises have been disproportionately impacted by recessions, which means that they have to put extra effort into developing strategies to help them weather the storm.

It’s not all bad news though. Business owners can minimize the losses of an upcoming recession with better customer retention. If you’re struggling with the concept and need insight into retaining customers, this article is for you. We will discuss all there is to know about how to boost customer loyalty and retention, whether you are a small or large enterprise.

Table of Contents

• What Is Customer Retention?
• Why Is It Important to Retain Customers?
• 15 Bulletproof Strategies to Retain Customers (With or Without a Recession)
• Retaining Customers in 2023

What Is Customer Retention?

Before we discuss how to retain customers, you need to learn the basics.

Customer retention is a basic metric that measures the ability of a company to keep its customers for the long haul. It’s one of the classic ways to maximize return on investment.

Following are the most commonly used metrics to calculate customer retention:

Customer Churn

Customer churn, which is kind of the opposite of customer retention, is the rate at which consumers stop doing business with you. This is measured as the proportion of customers lost over a certain period of time over the total number of customers over the same period.

The churn formula looks like:

Customer Churn = (Number of Customers at the Start of the Period - Number of Customers at the End of the Period) / Number of Customers at the Start of the Year

The lower churn rate a business is able to get, the better it is for the long-term sustainability of the business.

Customer Retention Rate

Customer retention is the rate at which a company has kept clients over time.

Following is the customer retention formula:

Customer Retention Rate = (Total Number of Customers at the End of the Period - New Customers Acquired Over the Period) / Customers at the Start of the Period

The higher the retention rate of an ecommerce website, the better it is as it means that it’s able to grow over time.

Repeat Purchase Ratio

The repeat purchase ratio is another metric that is particularly useful in evaluating how well a business is able to retain customers. It measures the rates at which consumers return to a store to make a new purchase.

To calculate this, you can use the following repeat purchase ratio formula:

Repeat Purchase Ratio = Number of Returning Customers / Number of Total Customers

The higher the repeat purchase ratio you are able to get, the better it is for your business.

Why Is It Important to Retain Customers?

Creating strategies for customer retention can be a lot of work for ecommerce merchants.

But are these strategies to retain customers really worth it?

The answer is YES because according to research conducted by Bain & Company, boosting the rate at which a business retains customers by 5% can increase profits by 25% to 95%.

But how do customer retention policies achieve this powerful positive impact?

The profit increase comes from many different benefits.

Here are some of the primary ways in which a customer retention policy can help business owners:

1. Enhanced Sustainability

A strategy to retain customers helps businesses build and maintain a solid customer base, which eliminates the need to constantly stress out about chasing after new customers. This means that the enterprise doesn’t have to put all its financial and human resources into generating leads and turning them into customers. This is particularly important during a recession when consumers are less likely to be willing to spend money on a new brand, no matter how much effort it puts into ecommerce marketing.

Instead of spending money on new leads, a business can allocate some resources towards improving existing products and developing new ones to meet the constantly evolving needs of both new and present users. All this leads to better long-term business growth and operations.

2. Increased Customer Value

Retaining customers means you have a higher customer lifetime value. The longer you’re able to retain your customer, the more loyal they become and the more likely they are to spend more on your store. With time, they will spend more money on your brand and choose you over your competitors. Based on data from Bain & Company, returning customers spend 33% more than first-time customers.

3. Maximized Business Earnings

Strategies and policies to retain customers are designed to understand consumer behavior and customer intent. The data and information that businesses gather while building their customer retention efforts can be used in different ways to make strategic changes for future business endeavors. With the increasing understanding of customer needs and improved products, enterprises can convert more customers and maximize business earnings.

4. Increased Customer Loyalty

Customer loyalty guarantees long-term business survival, even during recessions. InMoment reports that 61% of customers who feel loyal to a brand go out of their way to purchase from this brand. With the right ways to retain customers, you ensure your business runs, even when things get tough. Loyal customers continue to purchase from your company, and you can reward them well after the recession phase ends.

5. Reduced Customer Costs

The cost to retain existing customers is significantly lower than the cost to get new customers. The difference becomes even higher during a recession when consumers have to watch out their expenditure, so they are more likely to stick with brands they are already familiar with instead of testing out new brands.

Meanwhile, loyal customers help grow your business by providing word-of-mouth marketing, ensuring that new customers reach you without any investment from you.

So, since the advantages of retaining customers, especially during a recession, are so many and so big, let’s take a look at the best ways to retain loyal customers for ecommerce businesses.

15 Bulletproof Strategies to Retain Customers (With or Without a Recession)

Running an ecommerce business can be fairly challenging if you manage to build the required mechanisms to retain customers. Churn can easily turn into your biggest challenge if more customers leave than come. With an impending recession, things can get pretty bad pretty quickly for enterprises that don’t put their efforts into retaining customers.

To help out those that are struggling in this regard, we’ve put together a list of 15 simple, yet effective strategies to retain your customers:

1. Loyalty Programs

Loyalty programs are by far the most effective way to retain customers for your ecommerce business. These programs boost customer loyalty by ensuring that customers get rewarded each and every time when they choose your business over competitors. Points-based programs and cashback programs become particularly attractive during a recession when customers appreciate every dollar in their wallet even more than usual. With the help of a customer loyalty program, retaining customers becomes much easier.

If you’re not sure how to launch a loyalty program to boost customer retention, you can check our Core Loyalty. We will help you start and optimize your points-based, cashback, tier-based, or referral program with the power of AI and analytics.

Click here to schedule a demo.

2. Email and SMS Marketing

Email marketing and SMS marketing is a way of attracting existing customers again by offering new updates, sales, discounts, and more. However, for this form of ecommerce marketing to work, especially during a recession, you have to focus on personalized messages to meet the needs of each and every customer.

Core Marketing can take the load off you when sending personalized emails and SMSs to customers to bring them back to your store.

Click here to schedule a demo.

3. Personalized Experiences

Customers stay when they feel valued by a company and then they see that a brand is willing to put the extra effort into assuring that they find exactly what they are looking for. One of the best ways for ecommerce businesses to make users feel this way is through personalized solutions.

Core Personalization helps brands retain customers by delivering the most relevant products based on customer behavior and intent.

Click here to schedule a demo.

4. Omnichannel Experience

Yet another of the best customer retention strategies is keeping things simple and effective. Customers love when businesses offer a cohesive and integrated customer experience, regardless of how and where they reach out. They want things to be smooth and easy.

Omnichannel experience provides customers with a consistent experience across all platforms and devices. It offers convenience and a sense of security, which are the two things that customers look for most in a brand.

Core Omnichannel helps enterprises create a consistent and seamless customer loyalty experience both online and offline.

Click here to schedule a demo.

5. Customer Account Usage

Customer accounts provide consumer information that can help businesses strategize during recessions. They can learn about client preferences and make business adjustments accordingly. Companies can use customer accounts as a reference point and build their strategies around consumer preferences.

6. Customer Support Improvement

Improving customer support ensures customers have a pleasant experience in communication. In this way, they know that even if things go wrong for whatever reason, they will have someone to help them through. When users know they can rely on the customer support team of a brand, they won’t go to the competitors. A simple 24x7 chat option can suffice for most customers.

7. Retargeting Customers

Some clients get distracted and lose interest in your brand, but you can retarget them with new offers. You can send personalized offers to them and add them to your retained customers list. It may take some extra effort, but it will reel in your desired results.

8. Discounts

Offering discounts ensures that existing customers get the best market price from you. If your brand is more affordable, users won’t be looking for alternatives and won’t go elsewhere. Remember that discounts can be personalized too. For instance, you can offer a special holiday or birthday discount to make customers feel special. The more creative you are, the better this strategy will work.

9. Add-Ons

Free add-ons with customer purchases are a smart way to ensure clients stay with you. You can offer added benefits for free to show you value your customers. Find add-ons that work for each customer persona, and you’ll witness better repeat purchases than ever.

10. Prioritizing Feedback

Consumers love staying with a brand when they feel important to the brand. You should encourage customers to drop feedback, and when they do, you should assess it and act on it. This is one of the best ways to retain customers in the long run because they know that you are available and willing to address their evolving needs in this fast changing business environment.

11. Referrals

Referrals allow brands to retain their existing customers and attract new ones at the same time. It’s the smartest way to maximize your ROI which is of utmost importance during a recession. You can set milestones in your referral program and reward customers for every milestone they hit.

Core Loyalty can help with setting up a referral program.

12. Product Personalization

Personalization can seriously boost customer retention and company profits. Brands that practice product personalization experience 3x growth in sales. This is just the tip of what can be possible with the top personalization strategies. When customers find personalized solutions, retaining them becomes easier as they keep coming back to you every time they need a different problem.

13. Customer Satisfaction

Customers have numerous options for their purchases, regardless of the industry and the product. If you wish to stand out from the competition, you need to value your customer satisfaction. For instance, a service industry company should be able and open to adjust its services to meet the exact requirements of customers to keep them. It’s the most effective way to retain them in the long run.

14. Easy Returns

Customer conflicts can often lead to customer loss. It’s best to compromise a little on your policies and provide easy return options. When customers feel that there is an easy way out of getting something that doesn’t meet their exact requirements, they are more likely to shop from a brand and to stick with it for longer. You can always get more sales from them and compensate for the temporary business loss. Remember that the customer is king.

15. Quick Delivery

Brands like Amazon have succeeded with options like same-day delivery because clients don’t like waiting. If customers see you as a reliable option with quick deliveries, they will not opt for another company. Fast, reliable, convenient delivery options are one of the proven ways to retain customers and maximize sales.

Retaining Customers in 2023

Retaining customers in 2023 is more challenging than before. Not only customers have more options than ever before with the exponential growth of ecommerce businesses, but the intensified talks of a recession make them more careful where they spend their money.

This means that companies have to focus their efforts on setting up the right strategies to retain customers in order to be able to ride the storm that might be coming in the second half of 2023. With the 15 powerful strategies outlined above, you should be able to boost customer retention, fight churn, and sustain your business during uncertain times.

If you need some extra help in retaining customers, check out Coretava products. With personalization and gamification, we can help you build customer loyalty across all channels.

Click here to schedule a demo.