Winning E-commerce Customer Retention Strategies for Medical Device Brands in 2023
By Mitty Chang|Published On: June 19th, 2023|6 min read|
How is customer retention for your e-commerce channel? Would you say you are satisfied with how your brand’s current social media presence boosts your brand’s customer retention rates? In this article, we dive into 2023 social media trends for e-commerce brands.
MedTech brands are seeing positive customer retention boosts from their social media efforts, leading to brands investing more in social media efforts in their 2023 strategy.
According to Shopify, which powers nearly one-third of all USA-based e-commerce websites.1 With 93% of all internet users also on social media,2 it may not be surprising to hear that 9 in 10 customers buy from brands they follow on social media,3 making social media a focus in 2023 for many big e-commerce brands.
Analysts agree that spending on social media advertising is projected to increase by over 103 billion dollars (USD) over the next five years – a +179% growth.4 Companies that want to stay competitive at both attracting new customers and retaining existing customers need to have a robust social media strategy and social team.
What is customer retention and why is it important?
Customer retention measures, within a specific time period, how many customers who have purchased from your store continue to come back and re-purchase. For example, if we set the date range for the last 180 days, your customer retention rate would be the number of customers reordering divided by the total number of customers active during that time period. If 10,000 total customers ordered during the last 180 days, and only 1,000 came back to make a second purchase, then your customer retention rate is 1,000 divided by 10,000 = 10%.
Your customer retention rate can help with revenue forecasting and also be a great metric to focus your business goals around. Imagine if that 10% retention rate from the example increased by +15% to 25%. That would mean, in that previous example, your business is getting 1,500 more customers reordering. This retention rate is especially important if your business relies on customers coming back to re-purchase, such as those with subscription-based business models.
What about Customer Lifetime Value (CLV)?
Customer Lifetime Value is a measurement of how much revenue each customer, on average, will bring to your company in their lifetime. This is an important calculation that often guides customer acquisition and customer retention strategies. The Customer Lifetime Value is determined by multiplying your customer’s average purchase value, average number of purchases, and average customer lifespan. Similarly, Average Customer Value is the average revenue brought in per customer multiplied by their average number of purchases. Here are the formulas for Customer Lifetime Value and Average Customer Value below.
Customer Lifetime Value = (Average Customer Value * Average Customer Lifespan) Average Customer Value = (Average Purchase Value * Average Number of Purchases)
With some exceptions, many businesses want to ensure that their customer acquisition cost is lower than their CLV. Retention teams often use CLV as a metric to work on improving. Businesses with strong customer retention will have a higher Customer Lifetime Value.
5 ways to improve customer retention
We looked at the best practices of the most successful e-commerce brands, and distilled them down to the top 5 best practices for e-commerce stores.
1. Implement email automation
Successful e-commerce brands leverage email marketing automation to improve their conversion rates. Adding a well-crafted, high-value Customer Welcome Series Flow is proven to improve conversion rating by 2% on average across all industries.5 What information would be helpful to make sure your customer is set up for success using your product? A Welcome Series is also an excellent opportunity to make them feel welcomed into your brand with a warm, heartfelt message from the CEO or Founder. We have found that any email that is sent to customers has the probability of generating more revenue for your business, and can help identify your most engaged customers using email analytics from industry-leading email and SMS marketing platforms like Klaviyo.
Unleash the full potential of your brand’s e-commerce capabilities with Mind Machine
Our team has a proven track record of helping Medical Device and Med Tech companies go-to-market and succeed. From fundraising capital to increasing your brand’s sales, we want to unleash your full potential.
Consumers love being rewarded for their loyalty, and the top e-commerce brands understand this. Adding a loyalty rewards program is an excellent way to take your marketing or retention budget, and apply it directly to your most loyal customers. Apps like Loyalty Lion make it incredibly easy to jumpstart a loyalty rewards program for virtually any e-commerce brand. Loyalty programs have a proven track record of increasing the percentage of first-time customers making a second purchase and rewarding your most loyal repeat customers.
We recommend that all of our e-commerce clients make sure they have a loyalty rewards program set up for their brand. Remember, you can always continue to evolve your rewards program, so it does not need to be perfect from day 1.
3. Omnichannel customer support
2023 trends show that more than ever, consumers expect not only to be able to live chat with your customer support team but also that they can find your customer support team on social media too. This is why omnichannel customer support is becoming even more important in 2023, and often becoming the competitive edge brands need to retain their customers.
When was the last time you looked at your top 5% of customers based on the total revenue they have brought in? Whether your threshold limit for determining Very Important Persons (VIPs) is a specific dollar amount or a percentage based on revenue, it is always a good idea to keep those top customers happy. Consider inviting them to a special VIPs only Facebook Group or celebration party online with your company’s CEO. Giving your VIPs additional means of communication with your support team and retention specialists can help keep them in the event of a poor experience. Sending VIPs special loyalty promo codes paired with a heartfelt thank you letter is also a great way to not only keep them happy but also increase their total spend on their account.
5. Enable automations to setup your retention team for success
Direct-to-consumer (DTC) e-commerce stores with either one-time purchase options or subscription options both benefit from additional automations. Consider reordering email flows that reach out to customers asking if they need to restock their supplies. Apps like Churn Buster help reduce unintentional customer departures from dunning, whereas apps like Yotpo can improve your customer winback rates by +18% through automated SMS marketing. The more high-quality automation your e-commerce store has setup, the more touchpoints your team has with your customers.
What new customer retention initiatives will you launch this year?
With customer acquisition costs climbing across multiple channels, brands understand customer retention can be invaluable to the future of their business. Whether your brand already has all of these ecommerce customer retention best practices implemented, or it is just starting to consider implementing some, it is worth assembling a team dedicated to examining your brand’s customer retention strategies.
Senior Web Developer & E-Commerce Strategist
Mitty has been developing websites since 1998. His web development background has led him to work with hundreds of brands, growing their digital presence and expanding their e-commerce empires. With over a decade of Wordpress and Shopify experience, Mitty serves as Mind Machine’s Digital Director.