Top 5 Customer retention mistakes to avoid as a D2C Brand
As Peter Drucker once said, “The purpose of business is to create and keep a customer.” While getting new customers is essential, customer retention is where the real magic happens, especially for Direct-to-Consumer (D2C) brands. Did you know that acquiring a new customer can cost 5 times more than retaining an existing one? And according to a study by McKinsey, increasing customer retention by just 5% can increase profits by 25% to 95%.
One of the key benefits of focusing on customer retention is the financial stability it provides by reducing reliance on external funding. The higher revenue generated from repeat customers allows a D2C brand to maintain a steady cash flow, which in turn minimizes the need for outside investment or loans to fund operations. However, as brands grow, customer retention often becomes an afterthought, and this is where many stumble. Let’s uncover some common customer retention mistakes D2C brands make when trying to sustain their business and, more importantly, how to avoid them.
One of the key benefits of focusing on customer retention is the financial stability it provides by reducing reliance on external funding. The higher revenue generated from repeat customers allows a D2C brand to maintain a steady cash flow, which in turn minimizes the need for outside investment or loans to fund operations. However, as brands grow, customer retention often becomes an afterthought, and this is where many stumble. Let’s uncover some common customer retention mistakes D2C brands make when trying to sustain their business and, more importantly, how to avoid them.
Mistake #1: Failing to Personalize the Customer Experience
In today’s competitive D2C space, customer retention is seen to be heavily influenced by personalization. 71% of Indian consumers expect personalized interactions from brands, and 65% are willing to share personal information in exchange for a more tailored experience. Offering generic experiences may impact customer retention.
How to avoid it - You can use customer data to create personalized product recommendations or send custom discount offers. These are proven strategies for improving customer retention.
How to avoid it - You can use customer data to create personalized product recommendations or send custom discount offers. These are proven strategies for improving customer retention.
Example- According to Moengage, Mamaearth analyzes their customer’s purchase patterns and browsing activities to send tailored product recommendations and exclusive offers to users.
Impact - Mamaearth, a prominent D2C brand known for its organic skincare products, witnessed a significant 26% uplift in repeat customers after using hyper-personalisation strategies, contributing to improved customer loyalty and retention.
Impact - Mamaearth, a prominent D2C brand known for its organic skincare products, witnessed a significant 26% uplift in repeat customers after using hyper-personalisation strategies, contributing to improved customer loyalty and retention.
Pro tip for customer engagement - Use SmartBiz for its built-in analytics to add personalized product recommendations, custom discounts.
Mistake #2: Ignoring Post-Purchase Engagement
The sale doesn’t stop after a customer checks out! Why? Because, post-purchase engagement plays a crucial role in customer retention. 85% of respondents say they won’t shop with a retailer again after experiencing poor delivery, highlighting how critical post-purchase interactions like timely deliveries and updates are in retaining customers. Yet, many brands miss out on opportunities to engage with customers once they’ve made their first purchase, directly impacting customer retention
How to avoid it - With a post-purchase engagement strategy. You can ask for product reviews, send personalized thank-you emails, or even offer a discount on their next purchase.
How to avoid it - With a post-purchase engagement strategy. You can ask for product reviews, send personalized thank-you emails, or even offer a discount on their next purchase.
Example - Boat, the leader in audio products in India, engages customers post-purchase by sending personalized emails with product usage tips, exclusive offers, and warranty details. They also encourage customer reviews and feedback to refine their products.
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Impact- Boat receives positive reviews and has seen an increase in sales.
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Impact- Boat receives positive reviews and has seen an increase in sales.
Pro tip to ensure repeat purchase - Use SmartBiz to help you automate personalized post-purchase emails, you can also integrate reviews and feedback as well.
Mistake #3: Poor Customer Support and Communication
It’s common to lose customers due to poor customer service. In fact, 58% of Indian consumers will stop doing business with a brand after just one bad experience, according to PwC. Ignoring customer issues negatively affects customer retention.
How to avoid it - Focus on delivering great customer support through multiple channels.
How to avoid it - Focus on delivering great customer support through multiple channels.
Example - Lenskart, India’s leading eyewear brand, offers outstanding customer support to ensure a smooth experience across various channels. They provide 24/7 customer service through chatbots, email, and phone support.
Highlight - What sets Lenskart apart is their home eye-test service, where customers can schedule an appointment for an eye check-up at their convenience, blending online and offline service models.
Impact - According to a study by Linkedin, Lenskart's focus on multi-channel customer support has resulted in increased customer satisfaction and loyalty.
Highlight - What sets Lenskart apart is their home eye-test service, where customers can schedule an appointment for an eye check-up at their convenience, blending online and offline service models.
Impact - According to a study by Linkedin, Lenskart's focus on multi-channel customer support has resulted in increased customer satisfaction and loyalty.
Pro tip to create a seamless customer communication - Integrate live chat, automated FAQs, and personalized responses, ensuring instant support.
Mistake #4: Not Rewarding Loyalty
Loyal customers are your brand’s biggest asset, but if you don’t recognize and reward them, they may look elsewhere.
How to avoid it - Create a customer loyalty program that offers exclusive perks, discounts, or early product access. According to a report by Nielsen, about 50% of Indians belong to one or more loyalty programs , yet many brands still overlook this strategy.
How to avoid it - Create a customer loyalty program that offers exclusive perks, discounts, or early product access. According to a report by Nielsen, about 50% of Indians belong to one or more loyalty programs , yet many brands still overlook this strategy.
Example - According to a study by Nectar.io, Sugar Cosmetics, a rapidly growing beauty brand, introduced a tier-based loyalty system, Sprout, Sweetheart, and Angel, where each tier unlocks unique rewards and benefits.
Impact - The loyalty program led customers to make repeat purchases and interact with the brand, driving both retention and sales growth.
Impact - The loyalty program led customers to make repeat purchases and interact with the brand, driving both retention and sales growth.
Pro tip for higher retention rate - Try continuously engaging with your customers by creating a rewards program that’s personalized with a points tracker.
Mistake #5: Focusing Only on Acquisition, Not Retention
Many D2C brands get caught up in the chase for new customers, but here’s a fact: According to Gartner, 65% of a company’s business comes from existing customers . Ignoring retention is like filling a bucket with water while it’s leaking from the bottom.
How to avoid it - Build a retention-first strategy! Focus on rewarding your loyal customers with personalized offers or early access to new products.
How to avoid it - Build a retention-first strategy! Focus on rewarding your loyal customers with personalized offers or early access to new products.
Example- Starbucks has built one of the most successful customer retention strategies with its Starbucks Rewards program. Customers earn stars for every purchase, which can be redeemed for free drinks, food, and other items.
Impact- According to the Strategy Story, Starbucks has reported that
Impact- According to the Strategy Story, Starbucks has reported that
- The Rewards program drives over 40% of its total sales
- Their members tend to spend 3x more than non-members.
- According to Starbucks' quarterly earnings, they saw a 15% increase in repeat customers due to the program.
Pro tip to ensure long term growth- Segment your customers based on their purchase history and can create automated campaigns with personalized offers using SmartBiz’s built-in analytics.
Bonus- Mistake #6: Not Having Your Own Website
Usually, relying solely on social media or marketplaces limits your control over customer relationships and data. Without your own website, you miss opportunities to build loyalty and personalize the shopping experience. A dedicated website lets you showcase your brand and drive repeat sales.
How to avoid it - Build your own website within minutes to own the customer experience and improve customer retention. With our free, no-code eCommerce website builder, you can launch your site today.
How to avoid it - Build your own website within minutes to own the customer experience and improve customer retention. With our free, no-code eCommerce website builder, you can launch your site today.
Example - Warby Parker, an eyewear company, initially sold through their own website,this helped them collect valuable data to provide personalized recommendations based on browsing and purchase history.
Impact - According to a report by Earnest Analytics, Warby Parker experienced a 42% customer retention rate, which significantly contributed to its growth as a leading eyewear brand.
Impact - According to a report by Earnest Analytics, Warby Parker experienced a 42% customer retention rate, which significantly contributed to its growth as a leading eyewear brand.
Pro tip - SmartBiz can help you create your eCommerce platform. Integrate analytics to track customer behavior, create personalized shopping experiences that boost retention and loyalty and much more. Ready to build your website?
Customer retention is the backbone of any successful D2C business. Now that you're aware of these five + one common mistakes, it’s time to fine-tune your retention strategies and take your brand to the next level.
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