Improving your retention rate is a massive opportunity. This article breaks down successful retention strategies, including examples from Starbucks, Chase, Instacart, and more.

An often cited study by Bain & Company (in conjunction with Harvard Business School) has said that a 5% increase in retention can improve profitability by as much as 55%.

Implementing the lessons learned from these top retention marketing strategies will increase profitability in three major ways:

Click here to skip straight to the retention marketing examples. Or, read on to first get an overview of how to construct an effective retention campaign.

Customer retention strategy describes the activities used to transform customers into repeat customers.

In our own studies on customer retention, we've found eCommerce visitors who come back after making a purchase are

Other studies confirm the significance of improving customer retention.

There are numerous approaches to ecommerce retention marketing strategies. Below, we outline the best performing campaigns used by successful ecommerce companies. 

In the next section, we illustrate these customer retention strategies with examples. 

Reactivation retention campaigns target customer segments who are no longer engaging with your brand. 

Like all retention strategies, to be successful, a reactivation campaign must first identify a specific segment of customers that are about to leave or that have already left. Further, brands need to determine why they are leaving.

With this information, you can craft a relevant offer to bring "reactivate" the customer. 

One simple example is to set up a rule that sends an email based on recency of visit.

In this example, the segment is “Customers who haven’t visited the site in x days.”. The copy and series of messages should be directly tied to why your customer stopped ordering from you.

Return Path conducted a great study on best practices for reactivation campaigns. Some findings include:

Above, Sephora uses their loyalty program to bring customers back. Here we see a variety of dollar incentives combined with urgency in the form a strict deadline to use the coupon code.

Advocacy marketing focuses on getting current customers to talk about your product to their friends or network. It depends on capitalizing on positive experiences to not only gain customers, but increase retention.

Above, Starbucks presents a unique advocacy retention program. Their offer is great, giving previous customers an easy way to gift a Valentines to someone and simultaneously removing common hurdles such as convenience and shipping costs.

Deals have long been used in retail to prompt repeat purchases.dko

What ecommerce can take advantage of is the zero marginal cost it takes to communicate with a customer once you have permission to speak to her. 

This unlocks a number of deal based retention strategies, allowing brands to communicate at a much higher frequency than before possible. 

Ultimately, there are two major categories of deals that brands can utilize.

Discounts - Offer products at a reduced price.
Exclusivity - Offer products not normally carried to a particular group.

Above, Mint Julep embeds a deal based customer retention strategy in their checkout flow. In the process gain permission to contact the customer via text.

The RealReal formalized their advocacy marketing with their “Refer a Friend” offer. The program is a classic double sided referral program, with a number of nice touches to maximize conversions in the program.

We already saw how The RealReal utilizes customer advocacy to boost retention.

They also take advantage of exclusive offers.

Like Holar TheRealReal uses deals to encourage customers to return. However, instead of providing a straight discount on their products, they focus on providing additional value through credit.

This makes the retention strategy even more successful. The customer only gets the $100 bonus on their next visit.

Additionally, TheRealReal leverages memberships to increase the benefits of becoming a loyal customer.

However TheRealReal's membership model differs from Thrive's in a number of ways.

First, it is primarily centered on getting "first look" access to new, one of a kind products. Next, it offers multiple tiers to its membership program.

Instacart provides a great example of how to conduct a reactivation campaign. Below, we break down one of Instacart's many reactivation email campaigns.  

Their first email in the campaign urges the customer to download the app and gives a nice little bonus of free delivery. They also use urgency by putting a clear expiration date on their offer.

When a customer doesn’t bite, Instacart is quick to send follow-up emails. Each day an email is sent. The additional emails do a great job reinforcing the scarcity and developing the value proposition of why they should buy again.

In this example, they identify three ways Instacart benefits you in addition to the free shipping bribe.

At this point, most eCommerce reactivation campaigns are run through. However, Instacart shows how you don’t need to take no as a finality.

First, they empathize with their customer. The copy removes guilt from the transaction. It makes it ok that their first offer wasn’t taken, and gives permission to take advantage of the offer after the expiration date.

As customers continue to decline, Instacart begins builds more reasons for their customers to re-engage.

At the 9th email they introduce a monetary incentive to entice customers to come back. Notice that they use an exact $ amount, per the best practice.

Hollar is a fast growing online dollar store and do an excellent job leveraging daily deals to drive repeat purchases.

A few tactics that Hollar uses to make their deals more effective are:

Thrive’s whole business model revolves around it’s premium membership.

Like Costco, customers sign up for one yearly membership. This membership the primary revenue driver for Thrive, as they sell their products for near cost to their customers.

Thrive Market does an excellent job reducing friction through the signup process. First, they allow you to see exactly how much money you would save by becoming a member. Then, they give you a month free.

This membership design encourages retention in two significant ways. First, because customers pay upfront, customers want to shop more at Thrive to maximize their benefits. Second, Thrive Market’s business model allows them to monetize their customer base in a different way, giving them a competitive price advantage over other online grocers.

The credit card industry depends on repeat use. Because of this, most brands offer some type of loyalty award program. 

Chase is no different, offering points which you can redeem for a variety of rewards. What is interesting is how they combine their loyalty program with triggered emails. 

If a customer is using their card or is coming up towards their renewal date, Chase will further cement their position by triggering an advocacy based campaign. They offer a huge point bonus for the effort, brining customers further along their loyalty program and able to actualize the benefits of the card. 

Here, they use a form of advocacy based retention marketing, taking advantage of Valentine's day and positioning themselves as the perfect gift.

Here, Starbuck's uses their loyalty program to facilitate a give away. This is  a great way to deepen their customer relationships,  drive repeat purchases, and create loyalty in their customer base.

The first step is to commit to retention. This means tracking your retention rate, selecting a core customer segment to target, and creating retention marketing strategies to improve.

We put together two detailed articles on two excellent customer segmentation techniques to power your retention strategies.