Middle East Report: The Importance of Customer Retention

The number of online shoppers in the Middle East is still comparably small when placed on a global scale.

Retailers and payments organizations are working together to continue bolstering eCommerce within the region. However, a recent infographic released by Go-Gulf.com sheds light on a strategy that perhaps requires more attention: online customer retention. Every year online retailers are shelling out millions towards strategies that help acquire new online customers, but how do they aim to retain their existing customer bases?

Online Statistics

Go-Gulf reported that 41 percent of the revenue earned from online shopping comes from returning customers and repeat purchases. Interestingly this group of return and repeat customers only represents 8 percent of people visiting retail websites. The research indicated that a 5 percent increase in customer retention has the power to increase total profits by 25 percent to 125 percent. Additionally, eMarketer reported that the average order value based on return and repeat purchases was higher than for customers who had no purchase history.

Companies Are Investing In The Wrong Group

The infographic reported that companies invest more each year on customer acquisition programs than they do in customer retention. The investment isn’t worthwhile, since eCommerce reported that newly acquired consumers spend an average of $24.50, while returning customers spend an average of $52.50.

What’s more, the acquisition strategies cost at least seven times more than it costs to keep those already shopping with your brand or site. Customers are lost as a result of poor retention efforts, which costs companies a global average of $243 per lost customer.

Online retailers have a better chance of making sales with existing customers than with new prospects. The infographic reported the probability of making sales with existing customers  is 60-70 percent, compared to the probability of selling to acquired shoppers, which is only 5-20 percent.

How To Keep Them Coming Back

Online consumers in the Middle East are still warming up to the eCommerce market. While it is important to attract new shoppers, it is vital for merchants to keep the ones they’ve already reeled in. Merchants must create incentive for consumers to keep buying with them, and the infographic illustrates the best way to accomplish this is through loyalty programs.

Loyalty programs can include financial motivation by offering the shopper rewards, discounts, or giving loyalty points to work towards other offers. Shoppers will be more apt to make a purchase if they feel they are getting offered exclusive deals or are being rewarded for making repeat purchases. These loyalty programs are a good start, but the effects are very much short-term.

A more advanced strategy for consumer retention is one that is emotionally embedded through building brand loyalty and connection. When an online shopper becomes emotionally connected, eMarketer reported they are more likely to recommend the product to friends and family in addition to making repeat purchases.

EMarketer examined past online success and suggested that if If online retailers can build long-lasting relationship with Middle East shoppers through online retention programs, eCommerce sales will increase both through repeat purchases and via new customers who were influenced by recommendations from friends.

However retailers choose to invest in their existing shoppers is ultimately their decision. However, paying close attention to returning customers does more than increase sales: it also gives valuable insight as to who the target audience is and how to best serve them, which will help businesses to further grow.

Look below to see the Infographic, or click here to read the eMarketer survey.