The growth of mobile sales has led to many brands launching their own e-commerce apps, in an effort to connect directly with the consumer. But new research from CleverTap, a customer retention platform, has found that 86% of customers stop using shopping apps within four weeks of the initial download.
“Without focusing on retention, brands are trying to fill a leaky bucket and focusing on acquiring more users who don’t stick around for long,” said Almitra Karnik, head of marketing at CleverTap. “This impacts the top line as well as customer lifetime value for these brands.”
Brands looking to keep users engaged need to be aware of the different stages of user participation and adjust strategy to each group. A new but unconverted user is one that has downloaded the app but not registered; a first-time converted user has registered but not yet purchased.
Only 11.6% of new users remain active in the first week, according to the study, so brands should move quickly. Through targeted email blasts and notifications, CleverTap recommends that brands encourage registration by offering discount codes or the ability to create a profile in a single click. For registered users that have yet to purchase, strategies might involve sending personalized campaigns that promote browsed items.
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Once a user has completed a transaction and shifted into a regular converted user, they are less likely to uninstall the app and therefore become more valuable to the retailer. The CleverTap study found that user retention at week 12 (after app installation) was five times higher for converted users than new users.
“The cut-throat competition in the e-commerce industry makes it crucial for brands to deliver a superior customer experience,” said Karnik. “Our research indicates that e-commerce brands are losing customers faster than acquiring them.”
If a brand loses a customer, it is possible for them to regain the user. Through promotional and remarketing campaigns, a brand might be able to convince a user to redownload the app and CleverTap recommends doing this at regular intervals from the uninstall point.
However, this is more likely to be successful with customers who have purchased through the app previously and therefore already experienced value. While 42% of new users uninstall and only 5.21% of those go on to redownload the app, existing users have rates of 10% and 27%, respectively.
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