Ship Depot


The Ultimate Guide to Retention Marketing in the E-commerce Era

In the bustling world of eCommerce, businesses often focus on attracting new customers, overlooking an equally crucial component – retention marketing. What is retention marketing precisely, and why is it crucial for achieving success in eCommerce?

What is retention marketing?

At its essence, retention marketing centers around employing tactics that encourage current customers to continue patronizing your business. It involves nurturing customer connections and transforming individuals who have made a single purchase into loyal, returning clients.

The Importance of Retention Marketing

Retention marketing is a powerful tool in the eCommerce arsenal, and for good reason. By focusing on existing customers, businesses can significantly reduce costs, as retaining customers is cheaper than acquiring new ones. Moreover, repeat customers are more likely to become brand ambassadors, spreading positive word-of-mouth about your business.

Numerous studies underscore the effectiveness and value of retention marketing in today’s business landscape:

  1. The Harvard Business Review highlights that attracting a new customer can cost up to 5x more than retaining an existing one, illustrating the cost-effectiveness of retention strategies.
  2. Marketing Metrics suggest that the probability of selling to an existing customer ranges between 60-70%, a stark contrast to the mere 5-20% likelihood with new prospects. Therefore, investments in retention marketing are likely to yield substantial returns.
  3. A joint study from Bain & Company and the Harvard Business School, which found that a modest 5% increase in customer retention could boost profits by an impressive 25-95%, demonstrating a clear correlation between customer retention and increased profitability.
  4. Emarsys report from 2020 indicated that for the majority of businesses, a substantial 80% of future profits will originate from just 20% of their existing customers, stressing the significant impact of customer retention on future business growth and success.

Retention marketing is essential for eCommerce companies due to the following reasons:

  1. Cost-effectiveness: It is more affordable to retain existing customers than to acquire new ones.
  2. Increased customer lifetime value (CLV): Retaining customers boosts their long-term revenue potential. CLV is a measure of the total revenue a customer generates throughout their relationship with a company. By focusing on retention marketing, eCommerce businesses can encourage repeat purchases, upselling, and cross-selling opportunities, ultimately maximizing the revenue potential of each customer.
  3. Customer loyalty and advocacy: Retained customers become loyal advocates, referring others and promoting the brand.

Implementing Retention Marketing Strategies


In the eCommerce era, customers crave personalized experiences. Tailoring product recommendations, messages, and offers based on customer behavior and preferences can significantly improve retention rates.

Loyalty Programs

Loyalty programs are a classic retention marketing strategy. They reward customers for repeat purchases, encouraging them to stay loyal to your brand.

Email Marketing

Email marketing, when done right, is a potent retention tool. Sending regular newsletters, updates, and personalized offers can keep your brand at the forefront of customers’ minds.

Re-Engagement Campaigns

For customers who haven’t interacted with your brand for a while, re-engagement campaigns can be incredibly effective. These campaigns can remind customers of your brand and reignite their interest.

How to measure e-commerce retention?

Measuring retention is crucial for eCommerce companies as it provides valuable insights into the effectiveness of their customer retention efforts and the overall health of their business.

Time PeriodTotal Customers (at the beginning)Customers AcquiredCustomers LostTotal Customers (at the end)Retention Rate (%)
January 20221,0002001001,10090%
February 20221,1001501201,13088%
March 20221,130180801,23093%
Here’s an example table that illustrates how to determine the customer retention rate in eCommerce:

In this example, we track the customer retention rate over three months. Here’s how to interpret the table:

  1. Time Period: Indicates the specific time period for which the retention rate is being measured (e.g., month and year).
  2. Total Customers (at the beginning): This represents the total number of customers at the beginning of the time period.
  3. Customers Acquired: This shows the number of new customers acquired during the time period.
  4. Customers Lost: Indicates the number of customers who stopped doing business or churned during the time period.
  5. Total Customers (at the end): Represents the total number of customers at the end of the time period (beginning + acquired – lost).
  6. Retention Rate (%): Calculated by dividing the total customers at the end by the total customers at the beginning and multiplying by 100. It represents the percentage of customers retained during the time period.

In the given example, the customer retention rate for January 2022 is 90% (1,100/1,000 x 100), for February 2022 it is 88% (1,130/1,100 x 100), and for March 2022 it is 93% (1,230/1,130 x 100).


In the eCommerce era, focusing on retention marketing is no longer an option but a necessity. While attracting new customers is vital, it’s just as important to keep your existing customers happy and loyal. By implementing retention marketing strategies effectively, businesses can not only enhance customer loyalty but also increase their bottom line.


Q1: What is retention marketing?
A: Retention marketing refers to strategies that aim to retain existing customers and encourage repeat business.

Q2: Why is retention marketing important in eCommerce?
A: In eCommerce, retention marketing is essential to increase Customer Lifetime Value, enhance customer loyalty, and create stable revenue streams.

Q3: How can businesses implement retention marketing?
A: Businesses can implement retention marketing through various strategies such as personalization, loyalty programs, email marketing, and re-engagement campaigns.

Q4: How can businesses measure the success of their retention marketing strategies?
A: Businesses can measure the success of their retention marketing strategies by monitoring Key Performance Indicators and adopting a data-driven approach.

Q5: What does the future hold for retention marketing in the eCommerce era?
A: The future of retention marketing in the eCommerce era is expected to be shaped by technological advancements such as AI and machine learning, enabling businesses to understand and engage with their customers on a much deeper level.


Why Subscription-Based E-commerce Businesses are Booming in Today’s Economy?

Hey there, folks! Have you ever wondered what’s behind the incredible growth of subscription-based e-commerce businesses these days? You’re in the right place! In this blog post, we’ll explore the subscription-based business model and its application in the world of e-commerce. To kick things off, let’s start by defining the subscription-based business model and take a look at a relevant graph that showcases its impact.

A subscription-based business model is where customers pay a recurring fee, usually monthly or annually, to access products or services. In the e-commerce space, this model is typically applied through subscription boxes, membership programs, or digital services.

Source: McKinley analysis

What’s the secret to their booming growth?

Recurring Revenue and Predictability

One of the most significant advantages of subscription-based e-commerce is the predictable, recurring revenue it generates. Unlike traditional retail models where businesses rely on one-time purchases, subscription models allow companies to forecast their income more accurately. This predictability enables them to make informed decisions about expansion, inventory management, and marketing.

For example, Birchbox, a beauty and grooming subscription box service, has built a loyal customer base by offering personalized, curated product selections. This consistent revenue stream has allowed them to invest in customer experience improvements and expand their product offerings.

Convenience and Personalization

Today’s consumers crave convenience and personalization, and subscription-based e-commerce businesses are delivering just that. These services allow customers to receive curated products or experiences tailored to their preferences, without the hassle of searching for and purchasing items individually.

Take Stitch Fix, for instance, an online personal styling service. Customers fill out a style profile, and a personal stylist curates a selection of clothing and accessories based on their preferences. Subscribers can try on the items at home, keep what they like, and return the rest. This level of personalization and convenience has propelled Stitch Fix to significant success in the fashion industry.

Increased Customer Loyalty and Retention

Subscription-based e-commerce businesses foster long-term relationships with customers, leading to higher retention rates and greater customer loyalty. As subscribers continue to receive value from the service, their trust in the brand grows, and they’re more likely to stick around.

One example is Amazon Prime, which offers a multitude of benefits, including free shipping, access to streaming services, and exclusive discounts. In 2016, 91% of customers who had subscribed to Amazon’s Prime membership for the first year decided to renew their subscription for a second year. That’s way too high, isn’t it? The convenience and value provided by Amazon Prime keep customers engaged and coming back for more, driving the company’s incredible growth.

The Power of Data

Data plays a crucial role in the success of subscription-based e-commerce businesses. By collecting and analyzing customer data, these companies can better understand their subscribers’ preferences, habits, and needs. This information allows them to fine-tune their offerings and marketing strategies, leading to increased customer satisfaction and retention.

For example, Netflix, the popular streaming service, uses data to make informed decisions about the content they produce and recommend to subscribers. This data-driven approach has helped Netflix maintain its position as a dominant player in the streaming industry.

Content RecommendationsNetflix’s algorithm analyzes user viewing habits, ratings, and preferences to provide personalized recommendations.
A/B TestingNetflix continuously tests different user interface designs, features, and content thumbnails to optimize user engagement and retention.
PersonalizationThe platform personalizes the user interface, including content rows, categories, and search results, based on individual preferences.
Original ContentData analysis is used to identify viewer preferences, trends, and gaps in the market to create successful original content.
Customer SegmentationNetflix segments its user base based on demographics, geography, and viewing habits to better understand and target its audience.
Churn PredictionMachine learning models are used to predict user churn and identify potential reasons, allowing Netflix to take proactive measures to improve retention.
This table provides an overview of the key ways Netflix uses data to drive its success.

Market Adaptability

In today’s fast-paced and ever-changing economy, the ability to adapt is vital. Subscription-based e-commerce businesses can quickly pivot their offerings based on market trends, customer feedback, and emerging technologies. This flexibility enables them to stay ahead of the competition and continue to deliver value to their subscribers.

Blue Apron, a meal kit subscription service, is an excellent example of market adaptability. They’ve expanded their offerings to include plant-based and wellness-focused meal options, catering to the growing demand for healthier, more sustainable food choices.

Wrapping up

Subscription-based e-commerce businesses are booming in today’s economy due to their ability to provide recurring revenue, convenience, personalization, customer loyalty, data-driven insights, and market adaptability. By understanding and leveraging these factors, businesses can tap into the tremendous potential of this thriving industry. So, whether you’re an entrepreneur looking to launch a subscription-based business or a consumer seeking the next great subscription service, there’s never been a better time to dive in!