How Amazon maintains over 90% customer retention year over year

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Spencer Coon
Oct 08, 2018

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.

One company who has broken the code to customer retention is Amazon. Amazon’s customer retention is through the roof year over year. Amazon Prime memberships have a 94% retention rate after the first year and 98% of those users stay on for a third year. Not only that, but Amazon’s loyal prime members go on to spend more than twice as much as the average casual buyer. Not only has Amazon locked in return customers for twice as long, but they’re spending twice as much. It’s an eCommerce dream.

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:

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. If you want something more complex and effective, you can try Optimizely to literally change the content seen on your homepage depending on who is coming into your site. For example, if they are coming from a cooler city, you can display jackets and a warmer city, shoes.

customer retention / Amazon / tailor user experience  customer retention / Amazon / tailor user experience

Another even more simple tool you can try is 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.

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.

customer retention / Amazon / personalize return customer experience

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.

customer retention / Amazon / get information before they go

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.

customer retention / Amazon / update users off site

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.

customer retention / Amazon / easy checkout process

Build free shipping and returns into your pricing:

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.

customer retention / Amazon / free return in pricing

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.