What is the best way to gain users when it comes to ecommerce stores? Offer discounts and the consumers will come flocking to your website. Almost all ecommerce stores use this set rule to increase their user base and sales. However, by doing so, they are just eating their resources and incurring losses. While they do end up increasing the buyers on their website, it eventually gets nothing to a business if those one-time buyers do not convert into repeat buyers.
You can’t afford to attract buyers each day for routine sales. It’s tiring and on the top of that, financially exhausting. Financially, because then you will have to spend a big chunk of your earnings on marketing like a newly setup new business.
Let us look at one example:
An ecommerce store sells shirts costing $7 for $10 apiece. In order to acquire users, it offers 50% discount on these products. Now the store is selling each shirt at a loss of $2. For each new buyer, the store is losing $2. It ends up selling 100 shirts and acquiring 100 users. By doing so, it accumulates a loss of $200. This is known as customer acquisition cost (CAC). However, if those first-time buyers do not become repeat customers and never buy products again, then the store’s balance sheet will end up in red. That’s why this sort of discount strategy is hugely flawed, but still, most of the businesses adopt it and start relying heavily on it to acquire new users.
To make sure that the losses do not pile up, the online store must ensure that those acquired customers become repeat or lifetime customers. The bottom line is that most of these customers came to your website because you were offering discounts; and influencing purchase decision of customers. But you cannot go on giving discounts just to retain them.
The best possible way to retain their loyalty towards your store is to ensure that they remain interested in your products and services rather than the price that you offer. Let us throw some light on how to achieve such things:
Also Read: Future-proof Your Ecommerce Marketplace: Applications of Machine Learning
The bottom line is that it is far easy to find one time buyers, but highly difficult to convert them into repeat customers. Most of the ecommerce stores think that if they get buyers on their platform, they will be successful. This is where they confuse between one-time buyers and repeat customers. In order to grow, you ought to focus on customer lifetime value (CLV).
Just doling out discounts in order to retain customers is never a sound business model. You need to engage with your audience and incorporate the above-mentioned strategies to capture their interest, enabling them to come back to your store for new purchases.