The growing importance of retaining loyal customers

The growing importance of retaining loyal customers

Why and how to retain your most valued consumers

As well as designing and developing Shopify websites for the world’s most design-conscious luxury brands, By Association Only has spent 13 years providing ongoing strategy and marketing services to our merchants.

Historically we have found merchants are more focused on growing new business in lieu of nurturing their existing customers. In this article we look into why retention has historically been neglected, why it’s more important than ever, and give some tips on improving customer retention within your company.

Why do businesses historically neglect retention efforts?

The need for businesses to put more resources into retaining existing customers is nothing new, nor is the over-emphasis on building a new customer base. Of course time, money and effort should be spent on drawing the attention of new customers, but that shouldn’t be the only focus, nor necessarily the main focus.

One of the biggest reasons why businesses can fail to give retention efforts the attention they deserve is confusion about how to unearth and interpret the relevant data. It’s pretty easy to understand how many users you have on a website, for example, but less easy to understand who is returning, why they’re returning and their lifetime value.

Most digitally focused businesses will use Google Analytics (GA) to get more detailed insights into their site’s performance – to understand where traffic is coming from and how users interact with the site once they've landed. However, thanks to that data being anonymised, it can be tricky to understand the lifetime value of a customer.

With the imminent change to Google Analytics 4 though, this is all about to change. Data relating to customer acquisition will be shown more accurately, meaning that your retention efforts – say through ads or newsletters – will be easier to measure. 

As Google Analytics support explains, “Attribution in Google Analytics 4 properties provides enhanced attribution features – such as a revamped Conversion paths report – and new attribution features – such as property-level attribution modelling – that provide deeper insights and more actionability than ever before.”

As an example, currently, a customer who hasn’t visited your site in some time but does so thanks to a successful re-engagement email campaign and later goes on to convert during a different session would be regarded as a direct referral. 

GA4 however will consider the impact the initial email had on the user’s purchasing journey, even if it didn’t lead to an immediate sale.

Why is retention more important than ever?

So we know there is a history of neglecting retention efforts, but why is it more important than ever to invest?

1. Cost of customer acquisition is at an all-time high

The cost of customer acquisition has risen to an all-time high – “it can cost five times more to attract a new customer than it does to retain an existing one,” according to Forbes magazine.

2. Advertising costs have increased

Advertising costs have amplified to record levels thanks to Apple's privacy update, which made it harder to track iPhone users and target them with relevant marketing. With many users opting out of tracking, the portion of tracked users fell from 73 per cent at the start of 2021 to 32 per cent by the end of June, according to a study by ad-tech startup Moloco.

“Amid that shift, the average cost of conversions for ecommerce marketers surged 200 per cent for tracked users and 155 per cent for non-tracked users during the six months,” says the report.

3. Online competition has increased

Covid-19 too had a negative impact on the cost of acquisition for some retailers –  competition online increased as shoppers were forced to steer clear of the high street, meaning brands have to fight harder to keep return customers. Giving your customer a better experience so they don’t shop elsewhere has never been more vital.

Understand your churn rate

Before attempting to increase your retention rates, it’s important to understand your churn rate. “Looking at churn rates by customer segment illuminates which types of customers are at risk and which may require an intervention,” says Jill Avery, a senior lecturer at Harvard Business School.

Recency, frequency and monetary (RFM) segmentation is a great method to identify groups of customers for special treatment – marketers can target specific clusters of customers with communications that are more relevant to their particular behaviour. Find out how to use the RFM model here.

But as Avery says, don’t forget to look at customer churn rate as an opportunity, using it to predict who is going to leave – don’t use the data six months too late when you’ve already lost the customer. 

What’s acceptable of course depends on how profitable customers are in the short and long term. “Some business models thrive despite high churn rates and others rely on low. Look at what your company’s churn was last year and try and improve on that.” 

And don’t forget that a high churn rate can be the result of poor customer acquisition efforts. Heavy reductions can attract the wrong customers who purchase once and never return, so be careful.

How can retailers retain customers?

Research by Frederick Reichheld of Bain & Company shows that “increasing customer retention rates by 5 per cent increases profits by 25 per cent to 95 per cent.” So it pays to pay your existing customers attention. And there are so many ways in which you can identify who your VIPS are and treat them as such.

Whether you track spending over a period of time, keep a record of which customers refer the most number of friends or identify influencers who bring in the largest number of sales, it’s key to know the value of each customer. Once you have discovered who your VIPS are, you can create a customer segment and build a dedicated marketing strategy around them.

But don’t forget to get the basics right first – fast responses to customer queries, speedy shipping, easy and quick returns, and expertise are key reasons why someone shops with a brand more than once. Once those are in the bag…

Gather data and use it

According to Forbes, 70 per cent of customers have no objection to sharing personal information for a better experience. And as Rita Martins from Ometria explained during the ‘22 Pulse summit customers now have more power than ever to opt out of your marketing if they aren’t enjoying their experience. 

Retailers should ask themselves:

  • Are you asking for the right data? Are you asking the customer how often they would like to be spoken to and what about? Are you then using that data in the right way?
  • What are you offering in exchange for customer data? There has to be a clear value exchange. Tell the customer why you are asking for certain data, and why it will benefit them
  • What does the end-to-end journey look like? Put the customer at the centre, then define how you’re going to speak to them and using which channels
  • Does your tech support your vision for experience?


Once you know as much about your customer as they’re willing to share, use that data to personalise and enhance their experience. After all – as we explained in this article on the rise of SMS messaging in ecommerce – over 54 per cent of consumers are more likely to make a purchase if the messages they receive are personalised. 

Both email and SMS communications can include any data you have against your customers – for example, their name or a recent purchase they have made. Through web tracking you are also able to utilise this information and tailor a specific offer to a product you know they have previously browsed or added to their cart.

Using a platform such as Nosto both onsite and off-site through integrations with external service providers (ESPs) enables retailers to deliver carefully merchandised and meaningfully personalised shopping experiences at every touchpoint, across every device.

Nosto personalisation shown on Oh Polly
Nosto personalised product recommendations shown on Oh Polly


As Shopify is renowned for saying, “work smarter, not harder.” Using tools such as Klaviyo enables retailers to create a range of dynamic flows that target customers automatically in a specific way. The platform listens, analyses and acts on consumer data, using that data to deliver targeted user journeys across email and other owned channels.

This means that your marketing efforts aren’t in vain and continue over time – sending numerous automated campaigns across a specific period and at certain key consumption moments is much more effective than sending one campaign manually. 

Loyalty schemes and referral programmes

“Loyalty doesn't have to directly equal blanket discounting and more experiential rewards can actually be more valued by customers than generic discounts,” says George Linton, Head of Growth at By Association Only.

Understanding what your loyal customers like to spend their money on and offering them an exclusive discount on that product or range of products is likely to lead to high conversion rates, so find out what they like and target them with it.

You could also grant loyal customers early access to shopping events, making them feel special whilst creating a sense of urgency, or incentivise customers to spend more by rewarding them when they achieve certain goals. 

Perhaps you want them to share their purchase on social media, increasing your brand’s exposure to like-minded people. Or maybe you’d like them to spend £20 more to get a free tote bag with their purchase. Whatever your goal or goals, platforms including Loyalty Lion and Yotpo can help your customers achieve them – and keep coming back. 

Loyalty Lion, for example, allows customers to earn points for any on-site activity – from purchases to reviews and referrals. Points can be exchanged for vouchers, gift cards or custom rewards such as free products or shipping.

 Loyalty Lion implementation shown on Goodhood Store
Loyalty Lion implementation shown on Goodhood Store

About By Association Only

By Association Only is the Shopify Plus agency for the world’s most design-conscious luxury brands. Get in touch to discover how our team of experts can support your brand’s Shopify ambitions.

Recent articles you may also like

‍By Association Only creates bespoke Story Chain visualiser for jewellery brand Astrid & Miyu

“The greatest things ever built start with incredible foundations”

Yesterday, Shopify released its first round of updates this year under the name Foundations. We break down the most exciting updates for retailers and explore how they might benefit your business.

Twenty four health and wellness brands on Shopify

From food-grown supplements to science-backed medical technology we showcase 24 health and wellness brands using the Shopify platform.