Customer retention is the Holy Grail when it comes to e-commerce. What if you could count on your customers to come back again and again when you release a new product? What if you could count on them to tell all of their friends and leave you rave reviews on social media? What if you could increase your profits by lowering your cost per sale?

It’s no secret that costs more to attract a new customer than it does to keep an old one. In a recent survey, conversion rate optimization service Invesp found:

• Acquiring a new customer costs 5x more than retaining a current customer.
• Selling to a customer you already have has a 60-70% success rate, compared to the 5-20% success rate of selling to a new customer.
• A 5% increase in customer retention rates can lead to a whopping 25-95% increase in profits!

Retaining your best customers doesn’t have to be a mystery. By understanding a bit of human psychology, you can create a shopping experience that attracts and retains loyal fans.

Here are the three principles of customer retention.

Personalization

Everyone likes to feel special. But the online shopping experience can often feel incredibly impersonal. It’s the nature of the beast, of course — there’s no way to create an individual WordPress e-commerce site for everyone of your customers.

But you can use a number of tips and tricks to create the illusion of a personalized experience:

• Segment your email list and use triggers like anniversaries and birthdays to send personalized news and offers.
• Use a product suggestion WordPress plug-into offer personalized suggestions based on what your customer is browsing and has in their cart.
• Design the user experience of your website to include clear pathways for shoppers with different interests.

Learn more: 5 Ways to Create a Personalized Shopping Experience

Socialization

Social psychology is huge when it comes to where we spend our money. As the great entertainer P.T. Barnum once said, “Nothing draws a crowd quite like a crowd.”

That’s certainly true in e-commerce. When your company creates crowds of dedicated fans, those fans are more likely to bring in crowds of their own — and members of those crowds are more likely to stick around.

How can you use this principle to retain customers? Continuously remind your current customers that they’re in good company:

• Include testimonials and customer spotlights in your newsletters.
• Create an active community — such as a Facebook group — where customers can connect with each other and with your brand.
• If possible, host in-person events to thank and connect with local customers.
• Invite participation with a social media contest or user generated content campaign.

Learn more: Lessons From 5 Amazing User Generated Content Campaigns

Appreciation

A little thank you goes a long way — whether it’s for doing the dishes or for being a loyal customer, it’s awfully nice to feel appreciated! Make it part of your business plan to show your customers how much you appreciate their patronage. After all, if it weren’t for them, you wouldn’t have a business.

Saying “thank you” can take many forms:

• Start a customer loyalty program that rewards customers with points for purchases and referrals.
• Include a “thank you” coupon or a hand-written note in your shipments.
• Send individual emails to thank customers for their purchase.
• Reward customers with a surprise gift or discount on the anniversary of signing up to your site.

You can get even more mileage out of this idea if you follow the Pareto principle, which is that the top 20 percent of your customers likely generate about 80 percent of your business. If you use a CRM to track customer sales, single out the top 20 percent of your customers for something special: a special gift, a thank you phone call, an invitation to a local event, or something else creative.

Focusing on these already-loyal shoppers will not only help keep them around, it will help turn them into brand advocates that grow your business.

Learn more: How to Create a Customer Loyalty Program that Gets Results

Customer retention: playing the long game

Effective customer retention starts at the beginning of the customer lifecycle, by creating an amazing experience from the first moment they heard of you. When you keep the three principles of personalization, socialization, and appreciation in mind, you’ll be well on your way to retaining your best customers and growing your business.

Have you used any of these three principles in your own business? What did you learn? Leave us a note in the comments.