6 Steps to Create a successful Customer Retention Strategy on Amazon
Everyone’s trying to acquire new customers. In an FBA environment that’s getting more competitive every day, with thousands of new Sellers joining the millions that already exist, the competition is getting fiercer.¹
But what’s better than getting new customers? Retaining current ones. And by keeping customers loyal and coming back for more, they spread the word. Research on marketing techniques has found that if you can increase retention by as little as 5%, profits can be increased up to 95%!²
But Amazon doesn’t make traditional customer retention strategies easy. Data on what your customers are buying, when they’re buying it and why is technically available — but it’s hard to find. Datasets are hidden across multiple user interfaces, making it an awkward and long process to retrieve the right data, and harder still to gain insights.
You need a tool that provides you with insights about what’s really happening in your business. Do that, and you can create a successful Amazon customer retention strategy. Here’s how…
Suggested reading: For more on how to access and draw insights from Amazon data read — How to make sense of your Amazon customer data.
Step 1: Analyze your customer purchases
With the ever-increasing competition, guessing how to retain your customers and increase customer loyalty won’t cut it. You need to know what’s going on. This means analysis and insights.
First things first: you need to be able to analyze your customers’ purchases. By understanding your customers’ behavior, you can understand who to target to maximize customer retention and ROI.
In our example below you can see an analysis of customers’ purchases over a three-month period.
You can see:
- The products that customers who have bought once from a business bought next.
- Which product was most popular as a customer’s second purchase — one product taking the lead with 75.5% of customers choosing this product for their next purchase.
- Which products were frequently bought together — with one combination being a high of 599 times.
By analyzing your purchases with an Amazon-specific tool, not only do you get information on specific ASINs, but can view all your ASINs together. This helps you better understand what customers buy after purchasing particular products and what they’re looking for when they choose to buy from you.
All of this put together gives you an understanding of which products you should market to retain existing customers — including making bundle deals and cross-selling opportunities an easy decision to sign off on. It can also help you understand your average order value (AOV), helping you further understand which products bring in the most profit, giving you incredible insight on how to maximize your returns.
An easy way to do all this is through Nozzle. It brings together all the right data into one place and presents the analysis for you to interpret — basically all the legwork of trawling through multiple datasets is done for you.
Step 2: Get to know purchase intervals
Once you’ve analyzed which purchases are happening, the next step is to analyze when they’re happening. This is done through purchase interval analysis: the gap in between a customer buying one product, then buying the next.
Why is this important? Because it helps you know when your customers are returning, making it easier to accurately predict when other customers are most likely to return and therefore when to target them with remarketing (more on this in Step 5).
The image above shows how the purchase interval data across all products over a 3 month period is presented in Nozzle.
Not only does Nozzle give you data on what’s going on, it gives you insights too: information on how to use the data. In this example,
- The average time between a customer’s 1st and 2nd purchase is 60 days.
- 80% of repeats happen before 90 days after the initial purchase.
- And that the best retargeting window is between 61 and 90 days after the first purchase.
You can also analyze 2nd to 3rd purchases, 3rd to 4th purchases and so on — giving you more information about loyal customers throughout their lifetime. Alongside this, you can gain insights for specific ASINs to see purchase intervals on a product-by-product basis, helping you understand when it’s best to use PPC campaigns, and for which products.
Pro Tip: This means you can focus on customer lifetime value (CLV), rather than on a simple purchase-to-purchase basis. You can use this to invest in your brand longer-term, setting up long-term benefits from short-term actions.
Access to these insights means you have invaluable data on when you should be targeting your customers to increase retention rate. And increasing customer retention is important because people who buy a second time can go on to buy a fourth, fifth, sixth, seventh—you get the picture.
Step 3: Understand your products
You’ve analyzed customer purchases and when those purchases are happening. But you also need to understand retention percentages per ASIN, or product listing.
With a tool like Nozzle that draws your Amazon information into one place, you can understand which products offer the best opportunities for retention and also therefore growth. Which means you know which products to prioritize to boost customer engagement.
This example shows the number and percentage of customers retained after an initial purchase, and on subsequent purchases:
- The initial retention rate, from Order 1 to Order 2, is 9%.
- The total retention rate, from Order 1 to Order 5, is less than 0.1%
- However, the retention rate after Order 2 is higher each time after Order 1, at 15% at Order 3, 21% at Order 4 and 16% at Order 5.
This shows your customer retention rate (CRR or R%). And, as this example shows, once a customer orders the second time, they trust your business and return at a higher rate.
Nozzle lets you toggle between order numbers, categories, and ASINs to find exactly where you should be focusing to improve customer retention rates. Starting from specific products, you can gain insight into which ones have the best CRR, meaning you’ll know where the best opportunities for retention and growth are.
With this kind of insight, you can also find your average repeat purchase rate: the proportion of customers who have made a purchase with you more than once.
The benefits of understanding your repeat purchase rate, your CRR and your CLV are longer-term. Not only can it help you understand what your customers are doing today, but it can help you project profits going forward. These insights give you a better idea of the direction your business is heading, next week, next month and next year — so you can stay ahead of the competition.
Step 4: Set a customer retention rate
At this point in the process, you can set a data-based CRR. You know when people are repurchasing, you know what they’re repurchasing, and you know which products have the best retention rate. It’s time to use all that data to your advantage to put a marketing strategy into action.
But you also need to be realistic. You’re not going to retain all your customers for every order. But with Nozzle, you can put in place an Amazon customer retention strategy that will significantly increase both your CRR and CLV.
Pro Tip: Most Amazon ad features are only available to registered Sellers — so make sure you’re registered to make the most of your FBA.
If you can get people to return for that second purchase, they might stay for a fourth or fifth — and you don’t have to pay any more than you did to get them interested in the first place. This gives your Sponsored Ads and PPC campaigns a greater ROI by utilizing the right insights. Not only will your customers buy something from you once based on initial ads, those initial ads help to retain them for future purchases — over and over again.
Step 5: Remarket!
By now, you’re in the ideal place to remarket and introduce a new, highly effective ad management strategy. This is because you’ve analyzed:
- Your customers’ purchases — so you know what’s going on.
- The purchase intervals — so you know when to advertise.
- Your orders and your ASINs — so you know which products offer the best opportunity for growth.
- You’ve also set a realistic CRR so you know what you’re aiming for.
Armed with these invaluable insights gained through Nozzle, you can use all these steps together to remarket in the most effective way — through targeted PPC campaigns.
Because your PPC campaigns are now going to be more efficient, you’ll be able to improve your CRR while gaining a lower ACoS and a greater RoAS through a bespoke Amazon ad management strategy.
Step 6: Reward loyal customers with special deals
The final step! You’ve made it all this way and got customers to stay with you, but that’s not the end of it. Now’s the time to offer your customers a thank you for their loyalty, enhancing their customer experience further still.
Think of deals and promotions — remember the purchase analytics tool back in Step 1 that helps make bundle deals an easy decision? This is when to use it. Or how about free shipping on orders of a certain size, or after three purchases? We’ll leave this up to you.
And the incentive attached to exclusive offers is different from just finding a good price. Exclusive discounts offer customers something less tangible but just as real: a sense of feeling valued.
This helps create a loyal customer base through enhanced customer service. It’s simple:
- People like rewards.
- Rewards make people want to come back (in other words, they create loyalty and encourage them to engage with your brand).
- And those who are loyal, stay.
Create a strategy with Nozzle
Amazon has all the data you need; Nozzle lets you use it. By using a tool that brings the data together in a way you can draw actionable insights from, you can move from focusing on product analysis to promoting customer analysis.
Moving away from product-specific marketing to CLV marketing helps retain customers, growing your business in the long-term.
By understanding what’s going on under the hood of your business and following the steps laid out here, beat the competition with a successful Amazon customer retention strategy. Get started for free today.