How Amazon Maintains over 90% Customer Retention – Updated 2020
Stay at home – that’s probably one of the most repeated phrases during 2020. Luckily, you could always count on Amazon to bring anything that you needed during those times.
With the pandemic, lockdowns and mobility restrictions globally, online sales and e-commerce experienced an unprecedented boom. And of course, Amazon led that trend, consolidating its position. In fact, Amazon registered its most profitable quarter ever during Q320.
Besides the favorable circumstances for e-Commerce during 2020, Amazon has been cracking customer retention for a long time now. Amazon’s customer retention is through the roof year over year. As of September 2020, Amazon Prime members in the US were estimated to be 126 million in the US, who have a 93% retention rate after the first year and 98% after two years. It’s an eCommerce dream.
Increasing customer retention by just 5% can boost profits anywhere from 25-95%. Customer retention is a huge factor in the longterm success of e-Commerce stores and can’t afford to go overlooked. Considering it’s between 5 and 25 times more expensive to acquire new customers, you’ll save a ton focusing on customer retention.
Now we understand that not every eCommerce site can have the same reach and level of service as Amazon. But there are many aspects of Amazon’s interface, customer experience, and marketing you can recreate “in house” to improve your customer retention.
Here’s how Amazon maintains over 90% customer retention year after year:
- Tailor new user experience
- Personalize return customer experience
- Create a sense of urgency and FOMO
- Get their information down before they go (forever)
- Effectively reach out to users and update them off your site
- Create a simple and easy checkout process
- Offer free shipping, returns and perks for your loyal customers
Tailor new user experience.
As soon as a visitor gets to your site, you have an opportunity to impress and begin pushing them towards a sale. You may not know much about new users once they get to your site but you want to take what you do know and tailor your site’s experience to them so they are more likely to see value and engage. You can do this several ways. If you’re not too technical and want a slight, quick fix, you can differentiate content and products for different target audiences right on your homepage. For example, if your product is geared towards both businesses and individuals, you can create sections that indicate that with different copy that appeals to those audiences. For example, if they are coming from a cooler city, you can display jackets and a warmer city, shoes.
You can also use a tool like Beamer. Beamer is an interactive newsfeed that sits right within your interface users can open and explore. In your Beamer feed, you can announce new products, discounts, sales, etc. You can curate which updates users see depending on their demographics, location, language, and even past behavior on your site. It’s a simple way to personalize your homepage experience and keep people engaged for the long term. Learn more on how to use customer segmentation to boost sales in your e-commerce site.
Personalize return customer experience.
Even more than new users, it’s important that you personalize return customer experience with the information you know about them. Amazon has really set the bar high in terms of customer expectations for personalized experiences. This is one of the things Amazon does right that customers really notice. 79% of consumers say they are only likely to engage with an offer if it has been personalized to reflect previous interactions the customer has had with the brand. Monetate is an easy tool that allows you to personalize suggested products based on past user behavior on your site. You will convert much more and keep customer coming back with personalized suggestions.
Create a sense of urgency and FOMO.
Amazon has a special sales event “Prime Day”, only available to their subscribed customers, and they really know how to get the most of it!
Amazon creates a whole FOMO feeling around the Prime Day sales, with flash offers, limited amount of items for sale and access restricted to Prime members.
A few days before, they start to unveil just a couple of items for sale, for users to be more engaged than ever, as they don’t want to miss the upcoming offers! They also send you notifications on Prime Day offers based on your previous purchases and browsing, wish list items, etc.
Get their information down before they go (forever).
The likelihood that someone makes a purchase the first time they ever get to your site is very slim. In fact, 94% of users say they are not there to make a purchase the first time they go to a eCommerce site, but rather to check out the brand and get answers to questions. To create first time and repeat customers, you need to continue to communicate and stay relevant to users after they leave your site. Amazon does a great job at incentivizing email and tailoring emails to get users clicking back on the site and making the purchase. To keep in touch with users, incentivize them giving you their email. Offer a discount or an update on products in exchange.
Use OptinMonster to build a exit popup that captures them before they go. Amazon never lets a shopping cart go forgotten. They send emails after someone has left your site reminding them with a personalized email. Be like Amazon and use OptinMonster’s abandoned cart email templates to build an effective email and even offer a discount on the items left behind for each customer.
Effectively reach out to users and update them off your site.
User who are off your site don’t know about all of the amazing changes and updates happening on your site. Keeping them in the loop to bring them back is important. The obvious option is to send an email but this is getting less and less effective. You’ll likely get a 15% open rate on average and an even lower click through rate. If you send too many emails, there’s a good chance people will unsubscribe and you’ll lose them. Diversify how you update users and bring them back to your site. Use Beamer’s push notifications and the Zapier integration to blast your updates everywhere users could see it and bring them back to your site. It’s more effective than email at getting people back to your site and engaging with what’s new. Check out more details on how to use push notifications to increase sales in your e-commerce here.
Create a simple and easy checkout process.
Too many steps in the process from browsing to checkout can result in many abandoned shopping carts! Convert more sales faster by eliminating steps in the checkout process and make purchasing simple. This can be done in extremely simple ways like having the address form at checkout fill in automatically from a simple zip code or storing customer information. Checking out on Amazon for return users is literally a process of three clicks thanks to stored info. Show the progress of the checkout process so it doesn’t seem daunting and they know what stage they are at with a progress bar at the bottom. Always add “checkout” to the shopping cart window so checkout is easy to get to from anywhere on the site.
Offer free shipping, returns and perks for your loyal customers.
Amazon does a great job showing their Prime members how much they value them. Not only do they provide free shipping and same-day delivery in certain items, but they also offer free access to streaming music and video content, among other perks.
Matching Amazon’s customer service in terms of delivery is near impossible for any small e-Commerce business. Instead, offer your own sustainable version of stellar customer service by building shipping and returns into your pricing. Though it may put your prices higher than you imagined, your customers will appreciate your “generosity” from the start of their experience. It’s actually becoming an expectation: 49% of retailers offer free online returns. And it pays off: 92% of customers will buy from a shop again if returns are free and easy. Pave the way for repeat purchases and loyal customers with free returns and shipping.
Though we can’t all have Amazon’s in house development team and fulfillment infrastructure, there are tips you can mimic here and there to mirror their outstanding customer retention rate. Try Beamer as a simple way to both engage new and return users and get customers back on your site to become loyal, repeat customers.