Online customer retention rate hits record high in UK

By

Cajsa Lykke Carlson

Published
Aug 25, 2016

The online customer retention rate in the UK rose 5% year-on-year to 36.4% in the May to July 2016 period, according to new figures from the IMRG.

This is a record high and means that the percentage of customers making return purchases was at its highest rate since IMRG started tracking it in 2010, while the percentage of first-time customers was at a record low. The figures could be evidence that etailers are now focusing more on retaining their current customers than attracting new ones.

It's more expensive to attract new customers, as this can involve bidding for expensive, high demand Google search terms, for example, so etailers may be focusing on keeping existing customers to save money. IMRG says this could be a sign of a generally more cautious approach among retailers in how they used their marketing budgets during the period leading up to and including the EU Referendum.

In the second quarter, the average selling price per item reached its lowest rate in over three years, down 9% on the same period last year. This suggests there was a lot of discounting in the quarter, which also included Amazon Prime Day.

Tina Spooner, chief information officer, IMRG, said: “The record high customer retention rate suggests a more conservative approach to how retailers are assigning their marketing budgets, and a number of factors may have influenced the fall in average selling price per item – disappointing weather in May and June, concerns over the referendum, Prime Day etc. Yet what’s interesting is that overall online retail sales growth performed well over this period (up +17% yoy), with July’s growth (+19%) the highest since November 2014. The average basket value that shoppers are checking out with – which may include multiple items – was also up, despite the fall in individual item prices. So ultimately, as unpredictable a period as we may now be in, this approach seems to have kept customers engaged overall so far."