Customer Retention & Loyalty Programs for E-Commerce

30 flashcards covering definitions, formulas, metrics, strategies, program types, and real-life case studies from the lecture on e-commerce customer retention and loyalty programs.

What is customer retention in e-commerce?

It is a brand’s ability to keep customers loyal and prevent them from churning, defecting to competitors, or becoming inactive (repeat business).

Name three reasons customer retention is significant for an e-commerce firm.

It increases ROI, reduces Customer Acquisition Costs (CAC), and boosts Customer Lifetime Value (CLV). (Other valid answers: promotes word-of-mouth marketing, acquires new customers, focuses on growth, boosts loyalty).

Which metric shows the percentage of customers a business kept during a specific period?

Customer Retention Rate (CRR).

Provide the formula for calculating the retention rate.

[(Customers at End – New Customers) ÷ Customers at Start] × 100.

If you start with 100 customers, add 30 new ones, and end with 110, what is your retention rate?

80% retention rate.

Which metric measures the percentage of customers who leave during a certain period?

Customer Churn Rate.

Give the formula for churn rate.

(Lost Customers ÷ Customers at Start) × 100.

Starting with 200 customers and losing 30, what is the churn rate?

15% churn rate.

What does CLV stand for and what does it estimate?

Customer Lifetime Value; it estimates the total value a customer brings over their relationship with a company.

Which metric captures how satisfied a customer is with a product or service?

Customer Satisfaction Score (CSAT).

What does NPS measure?

Net Promoter Score measures customer loyalty, satisfaction, and enthusiasm toward a brand.

Which metric gauges how much effort a customer thinks it took to make a purchase?

Customer Effort Score (CES).

Define Repeat Purchase Rate (RPR).

The percentage of existing customers who make an additional purchase during a specific period.

Give one real-life e-commerce brand that exemplifies personalized communication.

Shopee uses personalized communication to boost retention.

Which Philippine brand is cited for exceptional customer service?

Zalora Philippines.

Consistent branding and community building are illustrated by which brand example?

Sunnies Studios.

State the primary goal of an e-commerce loyalty program.

To strengthen customer loyalty by offering exclusive rewards and benefits that encourage repeat purchases, boost engagement, and maximize CLV.

List three benefits of loyalty programs mentioned in the notes.

They increase repurchase rate, decrease acquisition costs (via referrals), and raise customer engagement & CLTV. (Other benefits: higher AOV, brand differentiation).

What type of loyalty program lets customers redeem accumulated points for discounts or freebies?

Point-based loyalty program.

Which loyalty program type rewards customers as they climb different levels based on spending or engagement?

Tiered loyalty program.

What distinguishes a paid (subscription-based) loyalty program?

Customers pay a fee to access exclusive benefits such as special discounts, free shipping, or early access to sales.

Which loyalty program type offers a percentage of the purchase back as cash or store credit?

Cashback or store credit loyalty program.

How does a value-based loyalty program build emotional connections?

It aligns brand and customer values by donating revenue or supporting social causes instead of offering traditional rewards.

What are the three tiers of Sephora’s Beauty Insider program?

Beauty Insider (free), VIB (spend $350/yr), and Rouge (spend $1,000/yr).

Name two key features of Sephora’s Beauty Insider program that drive engagement.

Personalized product recommendations and points redeemable in the Rewards Bazaar (also acceptable: exclusive perks, active community, omnichannel experience).

How many members does Sephora’s Beauty Insider have in North America, and what share of sales do they drive?

17+ million members, contributing about 80% of Sephora’s total sales.

What is Amazon Prime’s annual fee and primary objective?

$139 per year; its objective is to boost retention and repeat purchases via a value-packed paid membership.

Give three bundled benefits included in Amazon Prime.

Fast free shipping, Prime Video (exclusive content), and member-only deals/perks (others: Prime Music, Prime Reading, Grubhub+, Prime Gaming, Rx savings).

How many global members does Amazon Prime have?

Over 200 million members worldwide.