Retention, Recruitment, Referrals: Three Customer Strategies to Grow Your Ecommerce Business

11 May 2017 5 min read

If you search online for ways to grow your ecommerce business, the results will nearly always swing one of two ways: recruit more customers, or retain your existing customers and keep them coming back. We've seen the numbers, we know retention is clearly a great long-term approach to growing your business, but what does it mean in the short term? Does relying on your existing customers limit your growth? And are you asking too much of your customers by expecting them alone to bear the cost of your growth? Let’s take a closer look at each strategy, and how they could benefit your ecommerce business at different stages in your development. You never know, maybe we can come up with something even better.

Retaining Your Existing Clients

Earlier I alluded to some stats in favour of customer retention. Here they are:

  • A 5% increase in customer retention can increase your profitability by 75%
  • 80% of your future revenue will come from just 20% of your existing customers
  • Acquiring new customers will cost your business five times as much as retaining your existing ones.

They’re pretty impressive, and it’s easy to see why so many ecommerce business owners spend their marketing money on increasing their customer retention rates. But what happens if you try to use customer retention to grow your business?

The real question here is: how much more can your customers afford to buy? If you’re looking for steady, 10% year-on-year growth, then there’s a good chance your retained customers can provide it. But if you’re aiming to double your profits in the next year, that’s a lot to ask of your existing customers; you’ll need to recruit some extras to fill the gap. Business coach Paul Lemberg claims that most businesses can use a customer retention–focused growth strategy for growth targets below 20%; it just can’t generate the results for higher growth targets.

Recruiting New Customers

In general, store owners make a lower return on investment (ROI) on newly acquired customers. Not only are these customers more expensive to sell to than your retained customers, they’re also less likely to try new products, and on average, they’ll spend 24% less than returning customers. But there are times when recruiting new customers is the only viable way to generate enough growth, such as when:

  • you’re a new startup with very few customers
  • you are moving into a new product line that will appeal to a different crowd
  • you’re opening your first online store to accompany your traditional retail store
  • you’re expanding into new cities, or even new countries.

In each of the above cases, your ecommerce store requires entirely new customers to achieve growth, because your existing customers aren’t part of your target market.

But new customers should always be part of your sales strategy, because you’ll need to replace those customers who are moving out of your target demographic. For example, if you’re a kids’ fashion retailer, you’ll notice parents stop buying apparel from you when their teenagers become adults, and you’ll need to spend your marketing dollars finding new parents to buy from your ecommerce store.


There’s one more strategy that’s universally recognised as a way to boost your customer ROI, but it rarely gets discussed in the same articles as customer retention and recruitment: referrals. Referrals are, of course, another way of acquiring new customers and boosting your marketing ROI; the key differences are that:

  • Instead of marketing your ecommerce store yourself, you’re relying on your customers to do it for you
  • Customers acquired through referrals are likely to be an excellent match for your business.

With 92 percent of consumers trusting recommendations from their network over all other forms of advertising, it pays to get customers talking about you. But remember that customers aren’t the only ones who can provide referrals—anyone who has interacted with your ecommerce store can refer new business for you. So you’ll want to create a memorable guest experience not only for your customers, but also for site visitors and leads, and make it super-easy for them to share that experience with social media sharing buttons.

The only logical conclusion is that different strategies are going to suit different businesses at different stages in their growth. You’ll need to recruit new customers to sustain rapid growth, such as when you first launch your business or when you’re expanding into new markets or product lines. At other times, your growth will be driven by customer retention, as you ask your existing customers to come back time after time and maintain your steady growth. And finally, referrals will work to grow your business year in, year out.

Neto is a leading ecommerce platform designed to help your business grow across multiple channels, whatever stage of business development you’re at. It’s easy to use and offers a wide range of add-on integrations to the platforms you use for shipping, digital marketing, social media, and customer support, giving you ample opportunity to connect with new customers and invite your loyal customers back again. And if you’re looking for ways to work those connections, why not check out our recent posts on customer retention and lead nurturing?