In ecommerce, customer retention = growth.
And while acquiring new customers can cost up to five times more than retaining existing ones, many brands still pour the bulk of their budget into acquisition. But what if we told you that the real secret weapon for retention is email data?
The importance of customer retention
Email marketing is more than just a channel for communication. It’s one of the richest sources of behavioural insights you’ll ever have. When used strategically, it can turn one-time buyers into loyal customers with real lifetime value. Let’s take a look at how you can make that happen.
While customer acquisition is important to any business, the bottom line is that returning customers are generally more valuable than new ones. This is because, on average, repeat customers spend 67% more on orders than new customers. They are also a more consistent source of revenue – even a 5% increase in retention can boost profits by 25%.
1. Use engagement data to understand customer loyalty
Email engagement metrics, such as open rates, click-through rates and engagement recency, provide valuable signals of customer health and loyalty.
When analysed over time, engagement data helps create a retention “heartbeat”, which is a clear view of when customers are most active and intervention is needed. Here’s how to use engagement to better understand customer loyalty:
Identify loyal segments: customers who consistently open and click are strong candidates for loyalty or referral programs
Detect early churn: declining engagement can indicate waning interest. Identifying these patterns early allows for reactivation campaigns before customers disengage completely
Evaluate content effectiveness: by tracking which email templates or calls-to-action generate the most clicks, you can align future content with proven customer interests
2. Combine email data with purchase behaviour
For ecommerce brands, purchase history is just as powerful as email data, making it easier to predict what a customer is likely to do next – and show up before they start searching elsewhere.
Purchasing behaviour can provide opportunities to cross-sell and upsell, increasing average order value. For example, if a customer bought a moisturiser, you could use an email campaign to recommend a toner or serum that complements it.
The key to driving conversion these days is personalisation, and combining email data with purchase behaviour allows us to create tailored offers, whether it be discounts or loyalty points, based on past spending habits, to target the people most likely to convert with the content that appeals to them the most.
3. Build predictive retention segments
When you have enough engagement and purchase data, you can start to build predictive models (even simple ones) to flag potential churn risks. What do we mean by churn risk? A “churn” in email marketing simply refers to the percentage of users who unsubscribe or bounce from an opt-in email list within a certain time period.
Many email platforms, such as Klaviyo, make the process easier with built-in predictive analytics and automation flows. But if you’re creating your predictive retention segments manually, look for customers who haven’t opened an email in 60+ days, and then identify those whose average order frequency has declined. Use these insights to trigger re-engagement automations, such as “We miss you” emails containing personalised product recommendations or discount codes.
4. Gather feedback and preference data
Retention isn’t just about sending more emails. It’s about sending better ones. Use your emails to collect feedback directly from your audience. Adding quick polls or feedback links to post-purchase or newsletter emails is a simple way to gain some valuable insight into the opinions and preferences of your most engaged customers.
You can also offer your subscribers preference centres where they can choose topics or frequency to reduce unsubscribes.
5. Measure the retention metrics that matter
It’s not all about open rates – make sure you’re tracking the metrics that truly reflect customer loyalty:
– Repeat purchase rate: the percentage of customers who have bought from you more than once. According to Klaviyo, a good repeat purchase rate is typically around 20%-30%.
– Customer lifetime value (CLV): refers to the revenue generated by a customer over the entirety of their relationship with your business. This data can be used to predict who’s likely to bring you the most value over time.
– Churn rate: the percentage of subscribers who stop engaging with your emails or unsubscribe from your mailing list within a specific period. This is calculated by dividing the number of lost subscribers by the total number of subscribers by the total number of subscribers at the start of the period.
– Email revenue per recipient (RPR): reveals the monetary value of your email list and how successfully your campaigns and flows are at generating sales. Analysing this data can help you identify top-performing campaigns, optimise spending and better understand customer lifetime value.
Need help building long-term relationships rather than one-time transactions? Get in touch and our email marketing consultants will take a look at your current strategy.
