10 Proven Strategies to Reduce Customer Churn in Dropshipping

Customer churn refers to the percentage of customers who discontinue purchasing from a business within a specified timeframe.

It’s a critical measure for dropshipping businesses as it gives you insights into potentially lost revenue and can indicate areas of dissatisfaction that can lead to further customer loss if not addressed.

Monitoring churn allows dropshipping businesses to identify potential issues before they become larger problems. 

It provides valuable insights into factors that might be driving customers away such as product quality, pricing, or customer service.

These are areas that not only impact your current customers but also affect your reputation and potential for future growth.

Calculating customer churn is crucial for understanding the health of a dropshipping business and involves a bit of number crunching. 

Here’s how you can measure it:

• Start with your customers: Look at the number of customers you had at the beginning of a specific period.
• Count the losses: Determine how many customers you’ve lost by the end of that period.
• Do the math: Use the following formula to calculate your customer churn rate:

• Customer Churn Rate = (Number of  lost customers at the end of a period/ Total number of customers at the beginning of period) x 100

For example, if you began the quarter with 1,000 customers and ended it with 900, that means you lost 100 customers, resulting in a churn rate of 10%.

Check out: How to calculate margin and markup?

You can’t fix a problem without knowing its root causes. Naturally, the first thing you need to do is identify the key reasons behind your customer churn.

Your business generates a ton of data every day, so use it to your advantage.

What products are being bought? 

Which ones are being returned? 

How often do customers make repeat purchases? 

Are there common complaints in customer feedback? 

All these figures hold vital clues to understanding why customers might have stopped using your services.

You can start by looking for recurring issues and go from there. 

For instance, a sudden surge in returns for a particular product could indicate quality issues. A drop in repeat purchases might signal that your customers aren’t finding enough value in your dropshipping products.

Gathering feedback from your customers can help you understand their shopping experiences, preferences, and concerns.

Up to 85% of small and medium-sized enterprises have reported that online customer feedback has been quite beneficial for their businesses, according to Barclays.

So don’t underestimate the importance of collecting feedback and try out these strategies to get the opinion of your customers:

Customer surveys

Customer surveys are a fantastic way for you to get direct feedback. Make them short and simple. 

No one wants to spend 30 minutes answering questions!

Revolve has taken great approach on customer surveys by providing customers with simple questions related to their shopping experience they can complete within a minute.

Social media polls and questionnaires

Ever noticed how people love to share their opinions on social media? Leverage that! 

Conduct polls or questionnaires on your social media platforms. This not only helps you gather insights but also engages your audience in an interactive way.

Pretty Little Liars frequently interacts with their customers on their Instagram account by organizing FAQs where visitors can ask all kinds of questions related to their products.

Check out: How to grow your social media followers?

Reviews and ratings

Let customers know you appreciate their effort in posting reviews of your products and services. This is valuable feedback that can help you spot areas for improvement. 

Plus, positive reviews can boost your reputation and attract more customers!

Yours Clothing, for instance, publishes all of their reviews on their website, making them accessible to read for all customers.

NPS, or Net Promoter Score surveys, are a tool used to measure customer satisfaction and loyalty. 

It’s a straightforward survey asking one key question: “On a scale of 0-10, how likely are you to recommend our business?” 

Depending on what they answer, respondents will be classified as Promoters (9-10), Passives (7-8), or Detractors (0-6).

Take as an example, the online fashion store ASOS. Available online for everyone, their NPS survey asks customers to answer a few questions including:

• What’s their shopping location?
• How frequently do they purchase from ASOS?
• Would they recommend ASOS?
• What areas are customers unsatisfied with?

Reducing your customer churn rate starts with knowing exactly who your customer is. 

Sometimes, you need to take a step back and re-evaluate your target audience.

First things first, you’ve got to identify the most profitable segments of your dropshipping business. 

Take a deep dive into your customer data and look for patterns. Ask yourself questions like:

Who are my most loyal customers?

What do they have in common?

What products do they love the most?

Pay attention to these patterns, as they can provide valuable insights about where to focus your marketing and retention efforts.

Next, you’ll need to adjust your marketing efforts to these specific groups. 

For example, if you know they love a particular product, make sure it’s always front and center in your online store. If they respond well to certain promotions or types of content, double down on those.

Improving the onboarding experience is a continuous process and takes time. 

However, a poor onboarding experience can often lead to confusion, frustration, and ultimately, customer churn. 

One way to improve your onboarding process is to improve your site’s design and structure.

With up to 60% of customers reported not going through with their purchases due to poor UX, your site’s user experience and interface design shouldn’t be taken for granted.

Customers appreciate an easy-to-navigate website. A complicated checkout system or difficult navigation, for instance, can turn people away before they’ve even had the chance to enjoy your service.

Take as an example, the checkout page of the online fashion retailer SSENSE. The page is clean, with minimal distractions, guiding users through a step-by-step process that makes it clear what information is needed next. 

Top-notch customer service can be a game-changer for your dropshipping business.

Ensure your support team is available and responsive across multiple channels – live chat, email, phone call, or even social media – and make use of different customer service tools such as contact center software and CRM systems. The quicker you can address customer issues, the higher chance you have of retaining them. 

But what’s even more important to do is keep up with current trends. AI chatbots and virtual assistants have been the main topics of discussion for some time now, leading up to 64% of businesses to invest in them.

Check out: Best AI tools for dropshipping

This not only improves response time but also personalizes the customer experience by offering solutions tailored to their history and preferences. 

Check out: How to improve customer service with ChatGPT?

In today’s digital landscape, customers are everywhere – scrolling through social media, checking their emails, or browsing various websites. 

With 72% of respondents saying they prefer to connect with brands through multiple channels, it’s likely that your customers aren’t just hanging out in one place. 

To connect with them effectively, ensure your dropshipping business has a presence wherever they are. 

That means being active on multiple social media platforms, such as Facebook, Instagram, and TikTok, email marketing, SMS notifications, and others.

Making each customer feel special can make a huge improvement in your churn rate as well. 

As stated by Statista, 56% of surveyed customers reported they’d buy again from a store that offers a personalized shopping experience.

So, how can you provide such an experience?

First things first, into their purchase history, past interactions, and preferences. 

If someone frequently buys dresses from your store, why not recommend a matching pair of shoes you’ve just stocked?

Check out below how fashion store Farfetch has included a ‘Complete the look’ section within their checkout page.

Acknowledge special occasions like holidays or business anniversaries with personalized discounts. It shows you care beyond the transaction.

Encourage feedback and actually use it. If a customer suggests an improvement or voices a preference, implement it where possible and let them know their input made a difference.

Sweeten the deal for your shoppers by providing them with special perks such as discounts and loyalty programs.

For instance, you have to give your repeat customers first dibs on new products or special promotions. This not only makes them feel valued but also piques their interest and keeps them engaged with your dropshipping business.

If you decide to set up a loyalty program, you can reward customers for their ongoing support by allowing them to collect points with each purchase. Then they can exchange these for discounts or gifts.

A study reveals that 95% of companies interviewed have reported that their loyalty program members have spent more than non-members.

For example, by creating an account, fashion store’s customers LIVELY get 100 points they can use for further purchases and get additional points for every purchase.

Check out: Best customer loyalty strategies

Reducing customer churn in your dropshipping business isn’t just about great products and services; it’s also about offering your customers some knowledge. 

When customers understand how to get the most out of what you offer, they’re more likely to stick around. 

For example, customers often face similar issues or have common questions. An extensive FAQ section on your website can quickly resolve these without the need for back-and-forth communication. 

See how Fashionphile has created a detailed FAQ page for their customers.

Another thing you can consider is offering useful content on fashion styles that can help your customers make informed decisions. This could take the form of style guides, how-to articles, or trend forecasts that align with your product offerings. 

Such content not only enhances your website’s value but also positions your brand as a go-to resource in your niche.

Take a look at the denim guide below offered by the online store The Iconic.

Running a successful dropshipping business depends highly on your skills in keeping your customers coming back. 

Although decreasing your customer churn isn’t rocket science, it does require a mix of well-thought-out strategies.

Take our tips, give them your own twist, and watch as your dropshipping business builds a loyal customer base that sticks around not just for the products but for the experience you offer as well.