How to Reduce Churn in Ecommerce

Mara Lam on Jan 3, 2022 7:16:00 AM There’s nothing wrong with going after new customers, but Shopify stores need to focus on retaining their existing shoppers, too. But how do you know who a repeat shopper is, anyway? And how can you keep them around? how to reduce customer churn

If you want to run a successful Shopify store, you need to take a data-centered approach to marketing yourself. Metrics like eCommerce churn can take your shop to the next level—as long as you know how to calculate it, that is. Learn what churn in eCommerce looks like, how you can calculate it, and our three tips to reduce your churn rate.

What is Churn in eCommerce?

Churn is the opposite of retention. Any time a customer stops buying from you, that counts towards your churn rate. Your churn rate is the percentage of people who stop buying from you over a period of time, which brands usually measure by month, quarter, or year. Customers will come and go from your business, but it’s still important to pay attention to your churn rate because:

It indicates marketing success. Which marketing campaigns are worth the money? Churn rate will tell you how effective you are at retaining existing customers.
You can lower churn to make more money. When you know your churn rate, you can take action to lower it. And since it’s 5x cheaper to prevent customers from churning, you can boost revenue by optimizing for this metric.
eCommerce churn helps you be more consistent. What will your business earn six months from now? Most Shopify stores can’t forecast their earnings like this, but if you calculate your churn rate (and keep it nice and low), you can forecast financial performance with ease.

How to Calculate Churn Rate for eCommerce

Curious how to calculate churn rate for eCommerce? Churn varies by industry and company, but the average churn rate for eCommerce ranges from 3% to nearly 13%. The thing is, calculating churn for eCommerce isn’t a picnic. Unless you’re operating on a subscription model where it’s obvious when a customer stops buying from you, you have no idea how many customers are actually churning. The best way to calculate churn in eCommerce is to define what churn looks like for your business. Churn could happen when:

A customer turns off auto-ordering on a subscription
Shoppers send negative feedback
A buyer shops less often
A customer hasn’t bought anything in the last six months

Basically, you need to be clear on what behaviors indicate that a customer has churned. Once you’re clear on what churning means to you, plug your numbers into the churn rate formula to see your metric: (total lost customers / total customers) x 100 So, if you lost 100 customers this year but you have 2,000 customers, you could calculate churn as: (100 / 2,000) x 100 = 5% churn rate

How to Reduce Churn in eCommerce

Now that you know your churn rate, you might feel the urge to fix it ASAP. That’s good! Try these three tips to reduce churn in eCommerce.

1. Collect—and use—customer data

Are you collecting data on your customers? Use it! Look for patterns in user behavior and purchase amounts with your Shopify analytics. Over time, you’ll realize that churned shoppers do certain things before they leave for good, like unsubscribing from your SMS list or leaving a bad review. If you can spot the pattern, you can have an intervention before at-risk shoppers leave for good.

2. Stay in touch

Radio silence isn’t good when you’re running an eCommerce store. Shoppers will forget all about you if you go too long without contacting them. Make sure you stay in touch with shoppers through:

Educational updates: Is your product complicated? Maybe shoppers aren’t sure how to use it. Send shoppers educational resources so they won’t feel too intimidated to buy from you again. Put together how-to guides or influencer unboxings to get more traction with shoppers.
Discounts and freebies: Give shoppers a reason to stay on your SMS marketing list. A little bribery doesn’t hurt! Send your shoppers coupons, BOGO deals, or freebies on their birthdays to keep your store top of mind.
Abandoned cart reminders: Don’t let shoppers ghost you! As long as they’re interested in your products, you can bring them back into the fold with time-sensitive abandoned cart reminders. Solutions like Winback can automatically recover 34% of your abandoned carts.

3. Prioritize customer service

Did you know that 58% of shoppers will leave a brand because of one bad customer service experience? Every shopper interaction matters, so instead of funneling all of your budget into Facebook ads, reinvest in the customer experience first. This might involve sending SMS messages to shoppers with their order confirmation and tracking details. Or even hire representatives on Zendesk to provide shoppers with 24/7 live agent service. If you aren’t sure where to start, check out your Google or Yelp reviews—your customers will probably tell you where you need to improve. how to reduce churn

Make Churn in eCommerce a Thing of the Past

A low churn rate for eCommerce is a sign that your business is sustainable and successful. While every business experiences churn, it’s a good idea to optimize your churn rate at every turn, whether that’s with better customer service or communication. Follow these tips to reduce your eCommerce churn and keep more of your hard-won customers on board. You don’t have to DIY everything yourself, either. Winback makes it a cinch to prevent churn and win over your abandoned carts. Download Winback now to start your free trial.

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