Marketer Spotlight: User Retention As The Key to Growth for eCommerce with Ana Maria Schlecht
By Akshatha Kamath Published: 20 January 2020 | Updated: 21 January 2020
Editor’s Note: User retention is important for any business, especially for eCommerce. Unlike traditional brick and mortar stores, the lack of opportunity to build face-to-face relationships can result in customer churn. You probably know that it’s cheaper to retain existing customers than acquire new ones. You also know that as high as 70% of new app users are likely to uninstall the app in the first three months.
Don’t worry, there are ways in which you can retain users and grow your business through your eCommerce App. In this edition of Marketer Spotlight, I have Ana Maria Schlecht talking about the growing worries around user retention and how eCommerce brands can boost retention in 2020.
Marketer Spotlight series covers opinions and advice from marketing and eCommerce leaders and influencers on the industry challenges, trends, and best practices.
Tell us about yourself, your company, and your current role at 2Checkout.
There are different ways to describe me – ambitious, with a positive attitude, a fast learner, innovative and a team player. Within the past two and a half years I had a great chance to be part of the 2Checkout international sales team, where I developed insights into the dynamics of the eCommerce industry, specifically subscription challenges.
2Checkout is a digital commerce provider, an all-in-one platform for global business. What we do is essentially help merchants – 17,000 of them, actually – drive sales growth across channels and increase market share by simplifying the back-end complexities modern commerce creates, such as global payments, subscription billing, merchandising, taxes, compliance, and risk, to name a few. By working with us, businesses can focus on innovating their products and delivering great customer experiences.
As a consultant for eCommerce, Payments, and SaaS, my responsibility is to develop new eCommerce projects and help companies selling online to grow their revenue or to optimize aspects of their digital commerce operations, whether payments or subscription management or carts, support and so on.
When customers are unhappy, they stop doing business with a brand. The more customers leave, the lesser a brand grows. Based on your experience working with eCommerce companies, how big a challenge is user retention?
User retention is extremely important and a significant challenge for eCommerce companies. It is a known fact that it typically costs five times more to acquire a new customer than to nurture an existing one. Also, existing customers tend to spend 67% more than the newly acquired ones. Plus, retention is a great leverage for new acquisitions. Given this context, retention needs and deserves a lot of attention. For many eCommerce companies, there is a lot of room for optimization, both regarding voluntary and involuntary churn. You need to separate the two as you need to employ very different tactics to improve retention depending on the reason why users choose to churn. As a digital commerce provider, 2Checkout is helping companies improve retention in both areas. Believe me, there is a lot of room for improvement, especially for involuntary churn, where end customers are actually happy with the product or service but for some reason their recurring payment doesn’t go through; we see nice results there, with minimum effort on behalf of the eCommerce company.
What are some of the common reasons for users to move away from a particular brand?
The reasons vary, depending on the type of churn the brand is facing. As hinted earlier, if we talk about involuntary churn, we deal with more technical glitches such as payment processing issues or loss of contact information. This builds friction and pain points in the customer journey, which is bound to lead to customer dissatisfaction and, eventually, churn. When a customer finds himself unable to complete an online purchase due to technical issues, she will give up on the purchase and switch to a brand providing a seamless shopper experience.
Voluntary churn is more challenging because it occurs when a customer ends the relationship with a brand or downgrades from a paid version. Most common reasons why customers chose to move away pertain to the low perceived value of the product, weak product engagement, or dissatisfaction with the customer experience (even a complicated purchase funnel, for instance, can negatively impact the conversion rates).
At what stages in the purchase journey do users typically drop-off? Could you share statistics that describe the drop-off rates for eCommerce apps?
While working with several of our clients, I have observed that the checkout process is definitely the stage in the purchase funnel at which most of their users abandon. And statistics back up this observation if we consider that, in 2019, the cart abandonment rate worldwide reached 69.57%.
You may think that because the users have come this far in the purchase flow, you have secured their purchase. Shopping cart abandonment occurs for several reasons, including lengthy forms, mandatory account creation which brings an additional step to the checkout process, not enough payment methods, or concerns about security or lack of reassurance (not showcasing delivery information, the refund policy or contact details). It’s important for businesses to understand that their cart can make or break the success of their purchase funnel. As such, it should be optimized on an ongoing basis, and A/B tests prove particularly useful in deciding what practice is most likely to convert visitors/leads. Also, besides optimizing the purchase funnel, you need to be ready to win back customers that have dropped during the purchase process, with strategies like abandoned cart emails, on-site pop-ups, retargeting ads, and other personalized experiences.
What is the most successful tactic that works for eCommerce user retention?
There are many tactics for building customer retention in e-commerce, and they work differently based on the particularities of each business. Some examples include improving the onboarding process, using multi-channel and personalized communication, and leveraging customers in the marketing efforts, up to implementing certain pricing strategies.
However, if I were to choose only one around which to create a retention strategy, I would go for customer success programs. As Jason Lemkin from SaaStr put it, “customer success is where 90% of revenue is.” There are retention metrics that must be monitored and improved, such as renewal and churn rates, NPS, CLTV, and others, but businesses should not limit their strategy to the quantitative approach because they risk missing the bigger picture. Customer success ensures that not only do customers stay (as figures show) but that they also gain real value from the product. Customer support addresses the functionality-related issues encountered by the customer, but customer success ensures that the product solves the problems which motivated the customer to purchase it in the first place. A customer success program provides customers everything they need to achieve the desired results while using the product together with live support, training, and recorded programs, documentation, demos, and regular business reviews. Nurturing and adding value in the customer lifecycle is essential in fostering retention and helps gain true brand advocates.
Could you share some examples of how some of the apps/websites have implemented retention strategies and the results they’ve seen?
One example that easily comes to mind is from HMA, now part of Avast. It’s a nice example because they employed a combined churn prevention strategy for improved results. They employed several tactics, including a final feedback form for people who dropped out regardless of the incentives offered. What they found out through the feedback form was very valuable: they analyzed the cancellation reasons that were trending and were able to implement changes into the product much faster than before, achieving a 6% recovery rate, essentially improved retention. Also, HMA employed our Revenue Recovery Tools for automatic subscriptions and they recovered 18% of revenue just by activating these advanced tools.
Another nice example is Absolute Software, which employed Revenue Recovery Tools in order to get a 23% uplift, as well as abandoned cart recovery tactics that yielded an additional 5% revenue gains.
What is the role of the online commerce platform in user retention?
It’s actually a huge role, and it starts with optimizing product presentation pages and cart pages and continues all the way to tools for combating and reducing churn, as well as the expertise and guidance to tailor and fine-tune the company’s strategy to achieve high revenue recapture rates. Just to give you some concrete examples, typical voluntary churn prevention capabilities comprise email offers and reminders; campaigns and tools to convert terminations into continued subscriptions; subscription enrollment and migration campaigns for transitioning manual renewal customers to auto-renewal; and, finally, survey tools.
Involuntary churn, being more difficult to address, is prevented with technologies such as intelligent payment routing, account updaters, expired card handling, configurable retry logic, dunning management, and multi-currency management. And I didn’t even go into storefront stuff, but I did mention some aspects in a previous question. Yes, lots to talk about here.
An important aspect – and we also do this at 2Checkout – is to conduct optimization projects together with clients in order to help them boost conversions and decrease churn, which both impact retention. However, it’s important to keep in mind that an eCommerce platform is still a third-party and it cannot go beyond certain limits. It can pave the way for building a sustainable retention strategy, but the ball goes into the company’s court since many of the optimization techniques I previously mentioned need to be implemented with the client’s help or at the very least need to be activated by the client.
Can you share examples that showcase how the online commerce platform has helped in growing user retention for some of your clients?
Certainly, I will share the results obtained by a client which is very dear to 2Checkout, namely 123FormBuilder, a SaaS-based form provider. We were lucky enough to take part in their growth journey.
While still a startup, they faced several challenges including lack of customization and integration capabilities which prevented them from improving automation and service speed. This led to high drop-out rates on renewals. After switching to 2Checkout, retention was significantly improved as renewal rates increased by 15 to 20%. These results have been generated by the capabilities provided by our platform, specifically the intelligent payment routing and the account updater services.
Going even further in our journey together, we carried out several programs aimed at improving their conversion and retention rates. For this, 123FormBuilder used the in-built A/B test tool provided by our platform in order to compare different shopping cart layouts and flows. The tool helped them choose the right option to implement. This data-based decision generated a 14% revenue uplift. 123FormBuilder is a B2B business and, as a result, its authorization rates were already high. Even so, the Revenue Recovery Tools improved authorization rates by 1.3% and this demonstrates that having the right tools in place, there is always room for improvement when it comes to retention.
Another recent example is Kilohearts, a developer of software synthesizers for the audio-video industry, who is leveraging 2Checkout’s voluntary and involuntary churn reduction tools, such as auto-renewal enrollment discounts, account updater and retry logic, and dunning management, leading to a 50% drop in subscription churn.
What is your advice to eCommerce brands trying to retain users?
Firstly, avoid acquisition-based growth fallacy! As opposed to traditional businesses, the eCommerce environment provides great levers for your retention strategy, which are also very dynamic. Adopt a customer-centric approach and flip the funnel – instead of thinking of your marketing efforts as a magnet for customer acquisition, direct them towards a sustainable growth strategy. Start with the customers you have in order to gain their insights on why they stay with you. In this way, you will be able to keep them and improve your targeting efforts directed to new ones. Acquisition and retention are strongly connected, but at the end of the day, it is the latter that drives the former, not the other way around.
Secondly, go beyond retention! Deploy a customer success program and go the extra mile with your customers’ experiences. Exceed their expectations and reach customer delight in order to boost customer lifetime value (CLTV). By doing this, you can allow yourself to increase your customer acquisition cost (CAC) and gain higher chances of acquiring the right customer that will stick with you. This can also help you transform existing customers into advocates who actively promote your product to others. Finally, leverage technology and your partners to boost retention further. There’s a lot of automation built into digital commerce platforms today – it’s a shame to not employ them to your advantage!
In the end, it’s a win-win situation!
Thank You, Ana, for sharing your thoughts on building a user retention strategy for eCommerce businesses. Marketers – What retention strategies have worked for your brand in 2020? Share them through the comments section below.
- Want to know more about user retention for eCommerce? Watch our on-demand webinar.
- Know the latest user retention benchmarks for eCommerce apps.
- Take a look at the successful retention strategy implemented by Tokopedia, an eCommerce unicorn from Southeast Asia.
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