How to increase Amazon profitability, by focusing on customer Retention Rate & Life time value
Amazon, is a hugely competitive environment and it is easy to focus solely on acquiring new customers. It’s also too easy to complain about the high cost of competing on Amazon through Amazon PPC, rather than, in both instances, focusing on the customer lifetime value
Retention is the key to increasing your Customer Lifetime Value (CLV)—a metric that reveals how much revenue a customer generates over the course of their relationship with your brand.
A high CLV means more profit, better brand loyalty, and sustainable growth.
Here's how you can boost your Amazon retention rate and maximize CLV.
What is Customer Lifetime Value (CLV)?
CLV is a projection of how much revenue a customer will bring to your business over time. On Amazon, it involves both first-time buyers and repeat purchasers, taking into account factors like average order value, purchase frequency, and customer retention rate.
A high CLV means a customer is not only buying once, but keeps returning, purchasing more frequently, and ideally spending more each time.
Why Retention Matters on Amazon
While acquiring new customers is crucial, retaining existing ones is significantly more cost-effective. Studies show that increasing customer retention rates by just 5% can boost profits by **25% to 95%**. For Amazon sellers, higher retention rates mean:
- Reduced customer acquisition costs (CAC)
- Higher sales consistency
- Improved brand loyalty and advocacy
- Better product reviews and ratings
And most importantly - profitability in the long-term
Here’s how you can improve your retention and customer lifetime value on Amazon:
Leverage Amazon’s Subscribe & Save Program
Amazon’s Subscribe & Save program is a powerful tool for retaining customers. It allows shoppers to schedule recurring deliveries for products they regularly purchase. This not only locks them into future purchases but also encourages loyalty by offering discounts for subscribing.
- Tip: Make sure to promote your products that are eligible for Subscribe & Save and offer discounts that incentivise customers to opt in. It’s a win-win: customers save, and you secure repeat orders. It is important not to see this as a marketing cost - more as a marketing long-term benefit
2. Deliver Exceptional Customer Service
Customer service doesn’t end when a sale is made. A responsive, solution-driven approach to post-sale issues like delayed deliveries or product questions can make all the difference in building trust and retaining customers.
- Tip: Monitor customer queries and feedback regularly, responding quickly and positively.
3. Optimize Your Product Listings for Conversion
A seamless, informative, and visually engaging product listing can enhance a customer’s shopping experience. If buyers feel confident in your product, they’re more likely to return for more. And if the product information and imagery answer all of the questions a customer may have about the product then they are unlikely to order it by mistake - and then need to return it.
- Tip: Regularly update your listings with optimized descriptions, keywords, and high-quality images. Don’t forget A+ Content and Amazon Storefronts, which offer a branded shopping experience that enhances customer loyalty.
4. Use Data-Driven Insights for Personalization
Amazon provides sellers with access to detailed analytics. Use this data to understand customer behavior, such as which products they frequently purchase or what time of year they tend to shop. You can tailor your marketing and product recommendations based on this behavior. Brand Analytics data is our favourite resource on Amazon Seller Central
- Tip: Implement targeted email campaigns and promotions using insights from customer purchase history, preferences, and behavior on your Amazon Store. Personalized follow-ups, such as “frequently bought together” suggestions, can increase the chance of repeat purchases.
5. Implement Post-Purchase Strategies
Post-purchase engagement is a critical, yet often overlooked, component of customer retention. Reaching out after the sale can boost satisfaction and keep your brand top-of-mind for future purchases.
- Tip: Encourage customers to leave reviews with follow-up emails, and offer incentives like discounts on their next purchase.
Use Amazon's **Request a Review** button to automate this process. Or use an automation tool to help. We like to use Helium 10 to automate this process.
6. Offer Promotions and Discounts
Everyone loves a deal, especially loyal customers. Offering exclusive discounts or promotional offers can encourage repeat purchases and strengthen loyalty.
- Tip: Leverage Amazon’s Coupons/Vouchers, Lightning Deals and Best Deals, and Prime-Exclusive Discounts to entice previous customers back. By targeting these offers to your existing customer base, you can increase retention and CLV.
7. Focus on Product Quality and Consistency
Consistently delivering high-quality products is one of the best ways to keep customers coming back. If customers trust your brand and its product offerings, they’ll be more likely to make repeat purchases.
- Tip: Monitor reviews to identify any recurring issues, and address them quickly. Ensure product descriptions accurately reflect the product to avoid disappointment.
8. Build Your Brand with Amazon Brand Registry
If you’re a registered brand on Amazon, take full advantage of the tools available through Amazon Brand Registry. You can create a strong brand presence with a branded storefront and A+ Content, both of which help in building customer trust and encouraging repeat purchases.
- Tip : Use Amazon Brand Analytics to better understand customer shopping behavior, allowing you to tailor your marketing strategies to boost CLV.
9. Experiment with Retargeting Campaigns
With Amazon DSP (Demand-Side Platform), you can run retargeting campaigns that re-engage customers who have shown interest in your products. These ads can follow potential buyers across the web, reminding them of your products and encouraging them to return to your listings.
- Tip: Retargeting is especially effective during key shopping seasons when customers are more likely to make repeat purchases, such as Black Friday or Christmas.
At ZEAL, we’ve managed millions in ad spend across Amazon, Google, and Meta, consistently delivering exceptional results. Want to see how we can do the same for your brand? Learn more about our services here.
10. Reward Loyal Customers
Recognising your best customers with rewards is a proven way to increase loyalty and retention. While Amazon doesn't have a built-in loyalty program for sellers, you can use creative methods to offer rewards.
- Tip: Send thank-you notes or offer discounts through follow-up emails to loyal customers. For those with their own e-commerce site in addition to Amazon, consider cross-promoting with loyalty programs that reward purchases on both platforms. Be very careful to comply with Amazon’s terms of service though.
Final Thoughts
Increasing customer retention and boosting CLV on Amazon isn’t a quick fix—it requires a comprehensive, customer-focused strategy. From offering subscriptions to delivering exceptional service, every touchpoint matters. By focusing on building long-term relationships rather than just making one-off sales, you can significantly enhance your brand’s profitability and ensure a steady stream of repeat customers.
